State Administration of Foreign Exchange, Circular on Issues Relevant to the Determination of Quotas for Provision of Security to Foreign Parties for Financing Purposes of Banks in China for the Year 2011

Issued: July 27 2011

Main contents: Article 1 of the Circular states that the aggregate quota for provision of security to foreign parties for financing purposes of certain Chinese-invested banks, foreign-invested banks with legal personality and branches of foreign banks for the year 2011 is determined to be US$76.37622 billion (Article 1). The basis for determining the quota for a single Chinese-invested bank or a single foreign-invested bank with legal personality shall be the Tier One capital combined with renminbi and foreign currency at the end of the previous year, and the basis for determining the quota for the branch of a single foreign bank shall be the working capital combined with renminbi and foreign currency or the net assets in foreign exchange at the end of the previous year (Article 2). Where an offshore institution issues bonds outside China and intends to seek a domestic bank, non-bank financial institution or enterprise for provision of security, the domestic guarantor shall submit the matter to the State Administration of Foreign Exchange for approval on a case-by-case basis through the foreign exchange bureau of the place where it is located. Applications for provision of security for issue of bonds outside China by domestic real property developers for their overseas subsidiaries will not be accepted for the time being (Article 5).