China Banking Regulatory Commission, Guidelines for the Management of Reputation Risk of Commercial Banks

A reputation issue means a relevant act or event that results in a reputation risk of a commercial bank. A major reputation issue refers to a reputation issue that results in major losses in the banking industry or large market fluctuations, causes systemic risks or affects the stability of the social and economic order (Article 2).

The Guidelines shall apply to Chinese-funded commercial banks, Sino-foreign equity joint venture banks and wholly foreign-owned banks established in China in accordance with the law, and shall apply, mutatis mutandis, to other financial institutions in the banking industry such as policy banks, financial asset management corporations, urban credit co-operatives, rural credit co-operatives, rural co-operative banks, trust companies, finance companies, lease financing companies, auto finance companies, money brokers, and branches of foreign-funded banks (Article 11).

Main contents: Commercial banks shall incorporate reputation risk management into their corporate governance and overall risk management systems (Article 3). Commercial banks shall establish a reputation risk management mechanism applicable to the whole bank, which covers investigation, categorised and hierarchical administration and emergency handling of reputation issues; supervision and evaluation of the handling of customer complaints; centralised administration of information announcement and news; and study of public opinion (Article 5). They shall also implement relevant measures to properly handle major reputation issues (Article 6).

Related legislation: PRC Banking Regulation Law (Revised), Oct 31 2006; and PRC Commercial Banking Law (Revised), Dec 27 2003, CLP 2004 No.1 p.4 & May 10 1995, CLP 1995 No.5 p.32