Nation issues rules on foreign-funded banks
(China Daily)Updated: 2006-11-17 08:41
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.
Article 47 A foreign bank branch's total domestic assets denominated both in RMB and foreign currencies shall be no less than its total domestic liabilities denominated both in RMB and foreign currencies.
Article 48 A foreign bank that establishes two or more branches in the territory of the People's Republic of China shall designate one of these branches for the overall management of all the other branches.
The banking regulatory agency of the State Council shall conduct consolidated supervision over the branches established by a foreign bank within the territory of the People's Republic of China.
Article 49 An operational foreign-funded bank shall, in accordance with the relevant provisions of the banking regulatory agency of the State Council, report to the local banking regulatory agency on the cross-border funds movement and assets transfer of a large amount.
Article 50 The banking regulatory agency of the State Council shall, in light of the risk profile of an operational foreign-funded bank, have the power to take such special supervisory measures as issuing an order to suspend part of its business or replace its senior executive.
Article 51 An operational foreign-funded bank shall hire an accounting firm established within the territory of People's Republic of China to audit the bank's financial reports, and shall report such a hiring decision to the local banking regulatory agency. Where the hiring contract is terminated, the reasons therefore shall be presented.
Article 52 An operational foreign-funded bank shall, in accordance with relevant provisions, submit its financial and accounting reports, statements and other relevant data to the banking regulatory agency.
The representative office of a foreign bank shall, in accordance with relevant provisions, submit relevant data to the banking regulatory agency.
Article 53 A foreign-funded bank shall be co-operative in the supervision and inspection carried out by the banking regulatory agency, and shall not refuse or hamper such supervision and inspection.
Article 54 A wholly foreign-funded bank or Chinese-foreign joint venture bank shall each put into place an independent internal control system, risk management system, financial and accounting system, and computer information management system.
Article 55 The chairman of the board of directors and senior executives of a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China, and the senior executives of the same foreign bank's branch engaging in foreign exchange wholesale business shall not hold concurrent positions in each other's organizations.
Article 56 Transactions between a wholly foreign-funded bank established by a foreign bank within the territory of the People's Republic of China and the same foreign bank's branch engaging in foreign exchange wholesale business shall be based on market terms and shall not be more favourable than the terms of the transactions between either entity and its non-related parties. Such a foreign bank shall provide full guaranty to the cash transactions between the forementioned wholly foreign-funded bank and the foreign bank's branch.
Article 57 A foreign bank's representative office and its staff shall not engage in any form of operational business activities.
Chapter V Termination and
Liquidation
Article 58 Where an operational foreign-funded bank decides to terminate its business activities, it shall apply in writing to the banking regulatory agency of the State Council 30 days prior to the date of termination and, upon examination and approval, effect its dissolution or closure and proceed to liquidation.
Article 59 Where an operational foreign-funded bank falls into insolvency, the banking regulatory agency of the State Council shall have the power to issue an order to suspend its business and clear its liability within a specified period of time. Where, within the specified period of time, such a bank recovers its solvency and intends to resume its business, it shall apply in writing to the banking regulatory agency of the State Council for the resumption of its business; where it fails to recover its solvency when the specified time limit is due, it shall effect its liquidation.
Article 60 Where an operational foreign-funded bank is terminated because of dissolution, closure, abolished according to law or declaration of bankruptcy, the liquidation shall be proceeded in accordance with the relevant laws and regulations of the People's Republic of China.
Article 61 Upon completion of its liquidation, an operational foreign-funded
bank shall go through procedures for cancellation of registration with the
original registration organ within the statutory time limit.
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