People's Bank of China, Regulating the Foreign Offices of Commercial Banks Guidelines

Promulgated: August 20 2001
Effective: as of date of promulgation
Interpreting authority: People's Bank of China
Applicability: For the purpose of the Guidelines, "foreign office of a commercial bank" is a foreign operational banking institution established or acquired by a wholly State-owned commercial bank or share-system commercial bank (Article 2).

Main contents: According to the Guidelines, prior approval shall be obtained from the People's Bank of China (PBOC) for a commercial bank to establish, acquire, upgrade, withdraw, consolidate or restructure a foreign office or to change the capital structure of a foreign office (Article 5). The appointment of senior management to the foreign office shall be subject to a qualification review by PBOC (Article 6). The parent bank shall file the operational and financial information of the foreign office with PBOC on a regular basis (Articles 7 and 8). Major matters incurred by the foreign office, such as major loss, serious fraud and punishment by the regulatory authority of the host country, shall be promptly reported to PBOC (Article 15). The Guidelines also provide that the parent bank must ensure the compliance with the applicable laws of the host country by its foreign office (Article 4). PBOC shall also comply with the laws of the host country when it conducts on-site inspection of the foreign offices of commercial banks (Article 24). Moreover, PBOC shall endeavour to sign a memorandum of bilateral regulation with the regulatory authority of the host country (Article 32).
Related legislation: PRC, People's Bank of China Law, Mar 18 1995, CLP 1995 No.5 p23; PRC, Commercial Banking Law, May 10 1995, CLP 1995 No.5 p32 and Administration of Overseas Financial Institutions Procedures, Apr 27 1990, CLP 1990 No.5 p6