Banking & Finance

Open gate for cross-border Rmb FDI flows
More new rules have been published that clarify the cross-border flow of Renminbi and they signal that China has formally opened the channel for cross-border and nation-wide Renminbi foreign direct investment

Measures for the Administration of the Capital Guarantee Funds of Insurance Companies [Full Text Translation]
保险公司资本保证金管理办法
The Measures require insurance companies to deposit capital guarantee funds in more than one bank.

Laying down the bankruptcy law
The implementation of China’s bankruptcy law has been mired by the inconsistent standards and interpretations of various courts. A new set of measures offers more guidance and clarity, especially in pinpointing bankruptcy causes and who assumes the burden of proof

China Insurance Regulatory Commission, Measures for the Administration of the Capital Guarantee Funds of Insurance Companies [Legislation Digest]
中国保险监督管理委员会保险险公司资本保证金管理办法
Insurance companies required to deposit capital guarantee funds in more than one bank.

State Administration of Foreign Exchange, Circular on Issues Relevant to the Handling of the Renminbi-foreign Exchange Option Portfolio Business by Banks [Legislation Digest]
国家外汇管理局关于银行办理人民币对外汇期权组合业务有关问题的通知
Safe puts forward risk-reversal option portfolios.

Ministry of Finance and State Administration of Taxation, Plan for Pilot Projects for the Levy of Value-added Tax in Replace of Business Tax [Legislation Digest]
财政部、国家税务总局营业税改征增值税试点方案
Transport and logistics sectors benefit from the new VAT reform.

China Banking Regulatory Commission, Measures for the Administration of the Sale of Wealth Management Products of Commercial Banks [Legislation Digest]
中国银行业监督管理委员会商业银行理财产品销售管理办法
Assessment of the risk bearing capacities of customers required for the sale of wealth management products of banks.

State Administration of Foreign Exchange, State Administration of Taxation and General Administration of Customs, Announcement on the Pilot Reform of the Foreign Exchange Control System for Trade in Goods [Legislation Digest]
国家外汇管理局、国家税务总局、海关总署关于货物贸易外汇管理制度改革试点的公告
Export foreign exchange procedures streamlined.

Measures for the Administration of Renminbi Settlement Matters Relating to Foreign Direct Investment [Full Text Translation]
外商直接投资人民币结算业务管理办法
These Measures govern the handling of renminbi settlement matters relating to foreign direct investment by banks.

People’s Bank of China, Measures for the Administration of Renminbi Settlement Matters Relating to Foreign Direct Investment [Legislation Digest]
中国人民银行外商直接投资人民币结算业务管理办法
More outbound cross-border Rmb investments expected from FDI earnings.

Funds: Heading in the right direction
The revised sale of securities investment funds measures introduce more competition by loosening qualification restrictions and allowing new entrants flexibility in compensation structures for value-added services

Channels ready for cross-border Rmb flows?
Over the past few years, China has been creating channels to allow a two-way cross-border flow of Renminbi (Rmb) funds to internationalise its currency. As the legal framework for this is still nascent, investors need to be cautious of practical hurdles and uncertainties

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 [Legislation Digest]
国家外汇管理局关于核定境内银行2011年度融资性对外担保余额指标有关问题的通知
Safe lowers banks’ quotas for provision of security to foreign parties.

New bankruptcy rules clarify burden of proof
Further definition on the legal causes of bankruptcy

Measures for the Administration of the Leverage Ratio of Commercial Banks [Full Text Translation]
商业银行杠杆率管理办法
These Measures shall apply to commercial banks established in the PRC, including wholly Chinese-owned banks, wholly foreign-owned banks and Sino-foreign joint venture banks.

Striving for banking system stability
New measures from China’s banking regulator aim to prevent financial institutions from becoming over-leveraged, and they provide a clear framework on accountability and detailed guidance rules on disclosure

China Banking Regulatory Commission, Circular on Supporting Commercial Banks to Further Improve the Financial Services for Small Enterprises [Legislation Digest]
中国银行业监督管理委员会关于支持商业银行进一步改进小企业金融服务的通知
Greater tolerance is allowed for NPL ratio of small enterprises.

Safe registration of China round-trip investments
New rules simplify foreign currency registration of round-trip investments and fundraising, while increasing the pressure and urgency on investors to rectify previous non-registration. Safe increases its focus and coordination while Mofcom uncertainties remain

China Banking Regulatory Commission, Guiding Opinion on the Implementation of New Regulatory Standards by China’s Banking Sector [Legislation Digest]
中国银行业监督管理委员会关于中国银行业实施新监管标准的指导意见
Banks required to meet capital adequacy ratio requirements of Basel III.

New rules impacting the structuring and trading of loans
Recent regulations introduced by China banking regulators impact how commercial loans are structured and traded. Among other things, interest-only loans are now restricted and certain consent rights are mandated for loan transfers

State Administration of Foreign Exchange, Circular on Abolishing and Revising the Examination and Approval Authority and Administrative Measures for Certain Foreign Exchange Transactions on the Capital Account [Legislation Digest]
国家外汇管理局关于取消和调整部分资本项目外汇业务审核权限及管理措施的通知
Safe streamlines foreign exchange approval procedures.

Banking rules set new capital adequacy ratios
New standards will help stabilise banking sector growth

Careful steps in the bancassurance market
New regulations from banking and insurance authorities aim to better monitor the burgeoning bancassurance market. Foreign insurance companies can expect a long-term and robust relationship with regulators if they cooperate, and are advised to develop suitable products for Chinese customers and lend their experience to the market

Guidelines for Regulation of the Bancassurance Business of Commercial Banks [Full Text Translation]
商业银行代理保险业务监管指引
The Guidelines detail the operating rules for bancassurance business concerning the insurance products, agency fees, sales model, sales, financial accounting, contingency mechanism and intra-industry exchanges.

China Insurance Regulatory Commission and China Banking Regulatory Commission, Guidelines for Regulation of the Bancassurance Business of Commercial Banks [Legislation Digest]
中国保险监督管理委员会、中国银行业监督管理委员会商业银行代理保险业务监管指引
Criteria should be met for selecting bancassurance cooperation counterparties.

State Administration of Foreign Exchange, Circular on Issues Relevant to the Determination of Short-term Foreign Debt Quotas of Domestic Institutions for the Year 2011 [Legislation Digest]
国家外汇管理局关于核定2011年度境内机构短期外债余额指标有关问题的通知
Safe reduces short-term foreign debt quotas again.

State Administration of Foreign Exchange, Circular on Issues Relevant to Further Strengthening the Administration of Foreign Exchange Transactions [Legislation Digest]
国家外汇管理局关于进一步加强外汇业务管理有关问题的通知
Four new measures to prevent inflow of hot money.

People’s Bank of China and Ministry of Finance, Announcement [2011] No.6 [Legislation Digest]
中国人民银行、财政部公告〔2011〕第6号
New rules on market making of newly issued critical-term bonds.

China Banking Regulatory Commission, Circular on Regulating the Use of External Credit Rating by Commercial Banks [Legislation Digest]
中国银行业监督管理委员会关于规范商业银行使用外部信用评级的通知
Banks may not rely solely on external credit rating for granting credit.

China Insurance Regulatory Commission, Circular on Matters Relevant to Regulating the Provision of Security to External Parties by Insurance Institutions [Legislation Digest]
中国保险监督管理委员会关于规范保险机构对外担保有关事项的通知
Insurance institutions not allowed to provide external security.

Due diligence is key for potential private investors in banks
Investment channels widened for private capital