The State Council, China's cabinet, will place financial holding companies under access management, according to a circular issued on Sept 13.
The document states that beginning on Oct 1, non-financial enterprises, natural persons and recognized legal persons in China should set up a financial holding company upon application with and approval by the People's Bank of China when they hold a controlling interest in or actually control two or more financial institutions of different types and meet one of the conditions prescribed by the decision.
The move aims to strengthen supervision and management over non-financial enterprises, natural persons and others that hold a controlling interest in or actually control financial institutions, regulate the behavior of financial holding companies and guard against systemic financial risks.
The financial institutions mentioned in the decision include commercial banks, excluding those at the village and township levels, financial leasing companies, trust companies and financial asset management companies, among other types.
Those conditions refer to: 1) When a commercial bank is among the financial institutions controlled, the total assets of the institutions are no less than 500 billion yuan or the figure is less than 500 billion yuan, but the total assets of other types than the commercial bank are no less than 100 billion yuan or the total assets managed in trust are no less than 500 billion yuan; 2) When a commercial bank is not among such financial institutions, the total assets of the institutions are no less than 100 billion yuan, or the total assets managed in trust are no less than 500 billion yuan; 3) Situations where the PBOC deems it necessary to establish a financial holding company, citing macro-prudential regulation requirements.
To apply for the establishment of a financial holding company, the paid-in registered capital should be no lower than 5 billion yuan and account for no less than 50 percent of the total registered capital of the financial institutions under direct control, according to the circular.
The PBOC should decide in written form whether to approve an application within six months from the date of accepting it, the circular said.
Those meeting the conditions before the decision takes effect should submit the application to the PBOC within 12 months, starting from its implementation, the circular added.
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