New Rules on Intermediary Services Offered by Commercial Banks

By Philip Gilligan, Partner and Athena Wong, Associate Lovells

Application

The Circular applies to the undertaking of off-balance sheet businesses that create non-interest income for commercial banks. "Commercial banks" are banking institutions established under thePRC, Commercial Banking Law  (中华人民共和国商业银行法) (promulgated May 10 1995) that accept deposits from the public, grant loans and conduct settlement and related businesses. Article 88 of the Commercial Banking Law provides that the law applies also to foreign-funded commercial banks, Sino-foreign equity joint venture commercial banks and branches of foreign commercial banks, unless other legislation provides otherwise. It is unclear whether for the purposes of the Circular and the 2001 Provisions such foreign or joint venture banks are banks "established" under the Commercial Banking Law, but the likely view is that they would apply to these foreign or joint venture banks just as the Commercial Banking Law applies to such banks.