China Banking Regulatory Commission, Implementing Measures for Administrative Permission Items of Foreign-funded Banks

Promulgated: September 11 2014
Effective: as of date of promulgation

Main contents: Among the conditions for the establishment of wholly foreign-owned banks and Sino-foreign equity joint venture banks, their minimum registered capital is increased from the existing equivalent to Rmb300 million in a freely convertible currency to Rmb1 billion or the equivalent in a freely convertible currency (Article 9). Furthermore, the Measures eliminate the requirement that the sole or controlling shareholder in a wholly foreign-owned bank or the sole or principal foreign shareholder in a Sino-foreign equity joint venture bank has a capital adequacy ratio of not less than 8%. Instead, such shareholder shall have a capital adequacy ratio complying with the provisions of the financial regulator of its residing country or region and the China Banking Regulatory Commission (CBRC) (Articles 11 and 12).

The Measures observe the principle of consistency in the regulatory criteria for Chinese and foreign-funded banks, maintaining in terms of permission conditions and procedures consistency with those for Chinese-invested banks to the greatest extent possible. The item most worthy of attention is the abolition of the provision in the old Measures concerning the establishment of sub-branches in the same city that stated that “an applicant may, in a city, only apply once to establish one sub-branch in the same city”. The Measures additionally abolish the provision requiring a sub-branch to have operating capital of not less than Rmb10 million or the equivalent in a freely convertible currency (Section Five, Part Two).

Furthermore, the Measures make the permission conditions, procedures and time limits for the engagement in derivative product trading by foreign-funded banks consistent with those for Chinese-invested commercial banks. For example, in the provisions on the engagement in derivative product trading, the Measures differentiate basic qualifications (which permit engagement only in the trading of hedging type derivative products) and general qualifications (which permit engagement in the trading of derivative products not for hedging purposes) (Section Three, Part Five).

The Measures also newly incorporate the conditions for applying for credit card business, requiring wholly foreign-owned banks and Sino-foreign equity joint venture banks to not have committed a serious violation of laws or regulations or have been involved in a major malicious case in the most recent three years, and having among their senior management personnel not less than one person with professional credit card business knowledge and management experience (Article 121).