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CBIRC to Assess Operating Risks of Foreign Bank Branches

Tue, 24 Jan 2023
Categories: China Legal Trends

On 30 Nov. 2022, China Banking and Insurance Regulatory Commission issued the “Measures for the Comprehensive Regulatory Rating of Foreign Bank Branches” (For Trial Implementation) (hereinafter the “Measures”, 外国银行分行综合监管评级办法(试行)).

The Measures consists of 26 articles. Among others, the following points are noteworthy.

  • The comprehensive regulatory rating of foreign bank branches refers to the evaluation and judgment made by the regulator on the operation, management, and risk status of foreign bank branches and the level of support they receive from their head offices according to the Measures based on the information obtained in daily supervision and other relevant information.
  • Regulatory rating results are the basis for the regulator to apply differentiated supervision to foreign bank branches.
  • The comprehensive regulatory rating of foreign bank branches consists of two parts: the core factors rating and the assessment of the support they receive from their head offices.
  • The core factors rating aims to comprehensively evaluate foreign banks’ operation management and risk status. Four rating factors are taken into account, including risk management, operations control, compliance, and asset quality.
  • The head office support assessment aims to determine whether the foreign bank is willing and able to provide adequate support to its branches in China, such as financial and management support. It involves three assessment elements: operating risks, financial conditions, and management capabilities of their head offices, as well as its support to its branches in China.

Contributors: CJO Staff Contributors Team

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