China issues rules on foreign-funded banks
(China Daily)Updated: 2006-11-17 06:47
In special circumstances, the new shareholder may be exempted from the provisions of subparagraph (2) of article 10 or subparagraph (2) of article 11 of these regulations with the consent of the banking regulatory agency of the State Council.
Chapter III Scope of Business
Article 29 A wholly foreign-funded bank or a Chinese-foreign joint venture bank may, in accordance with the scope of business approved by the banking regulatory agency of the State Council, engage in part or all of the following foreign exchange and RMB businesses:
(1) receiving deposits from the general public;
(2) granting short-term, medium-term and long-term loans;
(3) handling acceptance and discounting of negotiable instruments;
(4) buying and selling government bonds and financial bonds, buying and selling foreign currency securities other than stocks;
(5) providing letter of credit services and guaranty;
(6) handling domestic and foreign settlement;
(7) buying and selling foreign exchange and acting as an agent for the purchase and sale of foreign exchange;
(8) acting as an agent for insurance companies;
(9) engaging in inter-bank lending;
(10) engaging in bank card business;
(11) providing safe deposit box services;
(12) providing credit information services and consultancy services; and
(13) other businesses approved by the banking regulatory agency of the State Council.
A wholly foreign-funded bank or a Chinese-foreign joint venture bank may, with the approval of the People's Bank of China, engage in foreign exchange settlement and sale businesses.
Article 30 A branch of a wholly foreign-funded bank or a Chinese-foreign joint venture bank shall conduct business within the business scope authorized by its parent bank and the branch's civil liabilities shall be borne by its parent bank.
Article 31 A foreign bank branch may, in accordance with the scope of business approved by the banking regulatory agency of the State Council, engage in part or all of the following foreign exchange businesses, and RMB businesses provided to customers other than Chinese citizens within the territory of China:
(1) receiving deposits from the general public;
(2) granting short-term, medium-term and long-term loans;
(3) handling acceptance and discounting of negotiable instruments;
(4) buying and selling government bonds and financial bonds, buying and selling foreign currency securities other than stocks;
(5) providing letter of credit services and guaranty;
(6) handling domestic and foreign settlements;
(7) buying and selling foreign exchange and acting as an agent for the purchase and sale of foreign exchange;
(8) acting as an agent for insurance companies;
(9) engaging in inter-bank lending;
(10) providing safe deposit box services;
(11) providing credit information services and consultancy services; and
(12) other businesses approved by the banking regulatory agency of the State Council.
A foreign bank branch may receive a time deposit of not less than 1 million yuan (US$126,580) for each time from the Chinese citizens within the territory of China.
A foreign bank branch may, with the approval by the People's Bank of China, engage in foreign exchange settlement and sale businesses.
Article 32 Civil liabilities of a foreign bank branch and its sub-branches shall be borne by its parent bank.
Article 33 A foreign bank representative office may engage in the non-operational activities relating to the businesses of the foreign bank it represents, including, among other activities, liaison, market research and consulting activities.
Civil liabilities incurred by a foreign bank representative office in its activities shall be borne by the foreign bank it represents.
Article 34 An operational foreign-funded bank applying to engage in the types of RMB businesses within the scope of business as prescribed in article 29 or 31 of these regulations, shall satisfy the following requirements and be subject to the approval by the banking regulatory agency of the State Council:
(1) having opened business within the territory of the People's Republic of China for at least three years prior to the application;
(2) having been profitable for two consecutive years prior to the application; and
(3) other prudential requirements prescribed by the banking regulatory agency of the State Council.
Where a foreign bank branch changes into a wholly foreign-funded bank solely funded by its parent bank, the time limit as prescribed in subparagraph (1) or (2) of the preceding paragraph shall be calculated starting from the date when the foreign bank branch is established.
Chapter IV Supervision
Article 35 An operational foreign-funded bank shall, in accordance with relevant provisions, develop the operating rules, improve management systems for risk management and internal control, and ensure the compliance with such rules, policies and procedures.
Article 36 An operational foreign-funded bank shall comply with the unified accounting rules of the State and the provisions of the banking regulatory agency of the State Council on information disclosure.
Article 37 An operational foreign-funded bank shall comply with the relevant provisions of the State when issuing external debts.
Article 38 An operational foreign-funded bank shall determine its deposit and loan interest rates and the rates of various service fees in accordance with the relevant provisions.
Article 39 An operational foreign-funded bank to engage in deposit-taking business shall deposit required reserves in accordance with the provisions of the People's Bank of China.
Article 40 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the asset/liability ratio requirement prescribed in the Law of the People's Republic of China on Commercial Banks. A wholly foreign-funded bank changed from a foreign bank branch and solely owned by its parent bank, or a wholly foreign-funded bank or Chinese-foreign joint venture bank established before these regulations take effect shall, where its asset/liability ratio fails to meet the requirement, satisfy such requirement within the time frame prescribed by the banking regulatory agency of the State Council.
The banking regulatory agency of the State Council shall have the power to require a wholly foreign-funded bank or Chinese-foreign joint venture bank identified with high risks or weak risk management to increase its capital adequacy ratio.
Article 41 An operational foreign-funded bank shall draw loan loss reserves in accordance with relevant provisions.
Article 42 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the provisions of the banking regulatory agency of the State Council on corporate governance.
Article 43 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall comply with the provisions of the banking regulatory agency of the State Council on connected transactions.
Article 44 Thirty per cent of the operating capital of a foreign bank branch shall be maintained in the form of interest-bearing assets required by the banking regulatory agency of the State Council.
Article 45 A foreign bank branch's RMB operating capital plus RMB reserves shall be no less than 8 per cent of the branch's RMB risk assets.
The banking regulatory agency of the State Council shall have the power to require a foreign bank branch identified with high risk and weak risk management to increase the ratio set forth in the preceding paragraph.
Article 46 A foreign bank branch shall ensure the liquidity of its assets. The ratio of its current assets to its current liabilities shall be no less than 25 per cent.
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