China Banking Regulatory Commission, Circular on Issues Relevant to the Banking Regulation in the China (Shanghai) Pilot Free Trade Zone

The establishment in the Zone with qualified private capital of financial institutions such as private banks, financial leasing companies and consumer finance companies that bear risks themselves shall be supported. The establishment of Sino-foreign equity joint venture banks in the Zone by taking equity interests in Chinese-invested or foreign-funded financial institutions by qualified private capital shall be supported (Article 4).

The development of cross-border financing business, including but not limited to bulk commodities trade financing, whole supply chain trade financing, offshore vessel financing, modern service industry financial support, provision of foreign security for domestic loans and commercial paper by banking financial institutions in the Zone shall be supported. The promotion of cross-border investment financing services, including but not limited to cross-border merger and acquisition loans and project loans, provision of domestic security for foreign loans, cross-border asset management and wealth management services and REITs by banking financial institutions in the Zone shall be supported (Article 5).

Qualified Chinese-invested banks shall be permitted to engage in offshore banking business in the Zone (Article 6).

Institutions below the bank branch level, senior management and certain business access matters shall be subject to after-the-event reporting rather than prior examination and approval (Article 7).

Issued: September 28 2013

Main contents: Chinese-invested commercial banks and policy banks with a nationwide footprint and local Shanghai banks shall be permitted to establish new branches and specialised offices in the China (Shanghai) Pilot Free Trade Zone (the Zone) (Article 1).

The establishment of enterprise group finance companies in the Zone by qualified large enterprise groups; applications for the establishment of auto finance companies and consumer finance companies in the Zone by qualified promoters; the relocation to, and development in, the Zone of trust companies within the jurisdiction of Shanghai; the establishment of branches in the Zone by financial asset management companies with a nationwide footprint; and the establishment of specialised subsidiaries of financial leasing companies in the Zone shall be supported (Article 2).

Qualified foreign-funded banks shall be permitted to establish subsidiaries, branches, specialised offices and Sino-foreign equity joint venture banks in the Zone. The upgrading of sub-branches of foreign-funded banks in the Zone to branches shall be permitted. The promotion of reducing the number of years required for the representative offices of foreign-funded banks in the Zone to be upgraded to branches and for branches of foreign-funded banks in the Zone to engage in renminbi business will be studied (Article 3).

The establishment in the Zone with qualified private capital of financial institutions such as private banks, financial leasing companies and consumer finance companies that bear risks themselves shall be supported. The establishment of Sino-foreign equity joint venture banks in the Zone by taking equity interests in Chinese-invested or foreign-funded financial institutions by qualified private capital shall be supported (Article 4).

The development of cross-border financing business, including but not limited to bulk commodities trade financing, whole supply chain trade financing, offshore vessel financing, modern service industry financial support, provision of foreign security for domestic loans and commercial paper by banking financial institutions in the Zone shall be supported. The promotion of cross-border investment financing services, including but not limited to cross-border merger and acquisition loans and project loans, provision of domestic security for foreign loans, cross-border asset management and wealth management services and REITs by banking financial institutions in the Zone shall be supported (Article 5).

Qualified Chinese-invested banks shall be permitted to engage in offshore banking business in the Zone (Article 6).

Institutions below the bank branch level, senior management and certain business access matters shall be subject to after-the-event reporting rather than prior examination and approval (Article 7).