(Yicai Global) May 6 -- China will remove the shareholding ceiling in joint stock banks, city commercial banks and other small and medium-sized commercial lenders for single-funded Chinese or foreign banks, according to 12 upcoming policies aimed at opening up the financial market.
The country released 15 measures on market-opening last April and it is implementing them in an orderly fashion, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in a statement on May 1, adding that it will issue 12 new policies soon.
Half of the new policies are focused on banking, while four are for insurance. The trust and consumer finance sectors are each the focus of one other new policy. They continue to focus on the same positions of domestic and foreign investment in terms of equity, market access, business operations, regulatory rules.
Looser Foreign Shareholding Ratio
The CBIRC removed limits on foreign ownership for Chinese banks and financial asset management companies last year, Xiao Yuanqi, spokesperson of the CBIRC, explained to Shanghai Securities News on May 2. Eligible investors have had no limits on shareholdings in large banks and financial asset management companies since then.
Eligible major foreign shareholders and strategic investors have had a shareholding ceiling of 20 percent for joint-stock banks and commercial city lenders, which would go higher within a suitable range for some high-risk commercial lenders. The CBIRC will remove the upper limit of the shareholding ratio for single-funded Chinese or foreign banks in these institutions.
The CBIRC will also remove the review procedure for foreign banks' yuan-related business and allow them to instantly run operations once founded. It canceled the waiting period for foreign banks to apply for approvals in previous policies on financial opening but kept a tight grip on the sector.
Foreign banks will have free access to yuan-related business (including corporate and retail banking). They can start local and foreign currency businesses upon founding (foreign-funded corporate banks can directly operate currency retail business). This will facilitate new foreign-funded banks in China, which with mature conditions and sufficient preparations can provide local and foreign currency services straight away, Xiao said.
CBIRC will cancel the asset requirements for foreign banks to open banks with foreign legal representatives and branches. The purpose is to attract more overseas lenders with stable performance and unique features to the country and diversify the Chinese banking structure, Xiao noted. The move will provide opportunities for small but special and capable foreign banks to open units in the country but it will not lower the regulatory standards, focusing more on performance, quality and benefits, Xiao added.
Easing Foreign Access to Insurance
The four new measures in the insurance sector are another major step following last year's policies on raising foreign ownership to 51 percent and giving access to more businesses.
China will allow foreign financial firms to invest in Chinese foreign-funded insurance players, while only overseas insurance companies could do so previously, Xiao said, projecting that the move will bolster the types of shareholders and sources of funds. Insurance players will remain major shareholders to safeguard professional expertise.
The regulator will cancel the requirements of 30-years of operation and total assets of at least USD200 million for foreign brokers to conduct business in China, which will encourage high-quality overseas brokerages with significant late-mover advantages to enter the market. This will promote exchange and cooperation between Chinese companies and their advanced foreign peers, Xiao added.
Editor: William Clegg