PBOC solicits public opinion on new financial holding company rules

The People's Bank of China (PBOC) on July 26 started soliciting public opinion on trial measures on the supervision over financial holding companies (FHCs).

The measures have been formulated to promote the orderly development of procedure-based FHCs, effectively forestall financial risks, and better serve the real economy, the PBOC said.

An FHC is a type of bank holding company that offers a range of non-banking financial services, such as insurance underwriting and investment advisory services.

China has seen a rapid development of FHCs, which cater to the diversified demand for financial services of enterprises and consumers and help serve the real economy. But problems still exist as some FHCs, formed through the investment of non-financial enterprises, have made blind expansions that fall into regulatory gaps and bring mounting risks.

The measures will usher in comprehensive, continuous and thorough supervision over the capital, practice and risks of FHCs, the PBOC said.

In designating the scope of supervision, the new measures have made it clear that the PBOC will oversee the FHCs whose actual controller is a non-financial enterprise or a natural person within the territory of China, according to the central bank.

Meanwhile, comprehensive financial groups formed by financial institutions through cross-industry investment in other types of financial institutions will be subjected to the supervision of relevant financial regulatory authorities in accordance with the measures.

The trial regulation also raises the threshold for market entry, stipulates qualifications of FHC's board and management and introduces a negative list approach in the supervision of the companies' shareholders.