China Banking Regulatory Commission, Oversight of the Consolidation of Statements of Foreign-invested Banks Administrative Procedures

Promulgated: March 8 2004
Effective: April 1 2004
Interpreting authority: CBRC
Applicability: Oversight of the consolidation of statements shall be carried out on wholly foreign-owned banks or equity joint venture banks that have established business branches or subsidiaries as well as on foreign banks that have established two or more business branches in China (Article 3).
  A "reporting branch" means the head office of a wholly foreign-owned bank or equity joint venture bank; or an institution designated by the head office of a foreign bank or its authorized regional administration to submit, or file for the record, consolidated financial statements and comprehensive information to branches of the China Banking Regulatory Commission (CBRC) (Article 4).

Main contents: The Procedures provide further details on oversight of the consolidation of statements of foreign-invested banks in addition to the Oversight of the Consolidation of Statements of Foreign-invested Banks Guiding Opinion of 2000. While a reporting branch is required to submit consolidated financial statements of institutions in China every quarter, overseas branches and subsidiaries of wholly foreign-owned banks and equity joint venture banks are required to submit their financial statements and consolidated financial statements of the whole conglomerate every financial year (Article 13). In addition, the reporting branch is required to submit a Consolidated Report on Details of the Business of a Foreign-invested Bank every half year including such information as analyses on loan loss provisions and cash flows, details on affiliated transactions and foreign loans/investments, and explanations on changes to the organizational structure, business strategies or capital adequacy ratio of the parent bank (headquarters) (Article 15). Certain matters such as published annual reports and information disclosures of a financial year of business branches in China, assessment by external credit assessment institutions and published important press releases of the parent bank (headquarters) are also required to be filed by the reporting branch with the consolidation oversight bureau for the record (Article 14). Part Four gives details for on-site inspections conducted by the CBRC, and Part Five for external audit and three-party meetings (among oversight authorities, the external auditor and the reporting branch). Relevant oversight opinions on consolidation of statements will be the basis for examining applications for increase of institutions or business entry of foreign-invested banks (Article 38).
Related legislation: PRC Banking Regulation Law, Dec 27 2003, CLP 2004 No.1 p45; PRC Administration of Foreign-funded Financial Institutions Regulations, Dec 12 2001, CLP 2002 No.1 p5 and PRC Administration of Foreign-funded Financial Institutions Regulations Implementing Rules, Jan 29 2002, CLP 2002 No.3 p77
Repealed legislation: other relevant provisions on oversight of the consolidation of statements of foreign-invested banks in conflict with the Procedures