Commercial Banks' Related Party Transactions

May 02, 2004 | BY

clpstaff &clp articles

By David Yu and Charles [email protected]@llinkslaw.comRelated party transactions have led to considerable losses for Chinese commercial…

Share:

By David Yu and Charles Qin

Related party transactions have led to considerable losses for Chinese commercial banks, and a large amount of non-performing loans. It is reported that non-performing loans accounted for 17.8% of total lending by major Chinese financial institutions at the end of 2003. It is also believed that the risks hidden in related party transactions between commercial banks and their affiliated parties seriously undermine the safe and stable operation of Chinese commercial banks.

On April 6 2004, the China Banking Regulatory Commission (CBRC) issued theAdministration of Affiliated Transactions Between Commercial Banks and Internal Related Parties or