7/31/2019 Lombard Risk - Regulation in CHINA

1/3

Regulatorycompliance

CHINA

Capital

Beijing

Largestcity Shanghai

Currency Renminbi

Language StandardChinese

Population 1,339,724,852

GDP Nominal $7.298trillion

Purchasepowerparity $11.299trillion

Realgrowthrate 9.2%(2012)

Government MarxistLeninistsinglepartystate

Legislature NationalPeoplesCongress

Geographicalarea 3,704,427miles2

Economy 2nd

largest|Largestexporterofgoods

inthe

world

|2nd

largest

importer

|

Fastestgrowingeconomy(butslowing)

|Lowcostproduction

Corruption

perceptionrating/

worldwideranking

3.6[10good0bad]/75th

Pointsofinterest Worldshighestpopulation|Largest

standingarmy|2nd

largestcountryland

area;apublicsuperpower|Expected

toleadtheworldeconomyby2050|

Exponential/uncontrolledgrowthhas

severelyimpactedChinasresources

andenvironment. Benefitsofeconomic

developmenthas

not

been

distributed

evenly,resultinginawidedevelopment

gapbetweenurbanandruralareas

hasasignificant

business

presenceinChina,havingcarriedout

businessintheregionformanyyears. Our

professionalservicesresourcesliaisewith

thelocal

banking

community

and

are

engagedinimplementingarangeof

LombardRiskservicesandproduct,

includingfullyautomatedregulatory

reporting.

LombardRiskREPORTERforregulatory

compliance

LombardRiskbusinessandregulatory

complianceexpertsexplain:

regulatoryenvironment

in

China

Banksregulators

TheChinaBankingRegulatoryCommission(CBRC):

TheCBRCwascreatedbytheStateCouncilofPRCin

responsetoswellingdebtloads,undercapitalization

andnontransparentbusinesspractices;itisthe

countrysprimarybankregulatorsince2003.

ThePeoplesBankofChina(PBC):ThePBCisthe

centralbankofthePRC. Itcontrols,formulates,and

implementsmonetarypolicy;consolidatesfinancial

statisticsfromreportsintheindustryandproduces

economicanalysisandforecast;issuesRenminbi

(currency)

and

administers

its

circulation.

TheStateAdministrationofForeignExchange(SAFE):

TheSAFEisanadministrativeagencyunderthePBC,

whichdraftsrulesandregulationsregardingforeign

exchangemarketactivities;monitorsrisk,balanceof

paymentandexternalcreditanddebt;development

andsupervisionoftheforeignexchangemarket,

reservesandassets.

TheirroleistoregulatethebankingsectorofthePRC(Peoples

RepublicofChina).

Generally,datesforBaselIIIimplementationstartattheendof

2013,withdifferentdatesaccordingtowhethertheinstitutionis

systematicallyimportantornot.Systematicallyimportantbanks

haveuntiltheendof2013,whereasotherbankshavetilltheend

of2016

to

implement

Basel

III,

loan

provision

ratio

and

leverage

ratiosupervision.

Investmentfirmsregulator

TheChinaSecuritiesRegulatoryCommission(CSRC):

Thenationsfirstcomprehensivesecuritieslegislation

grantedtheCSRCauthoritytoimplementa

centralisedandunifiedregulationofthenationwide

securitiesmarketinordertoensuretheirlawful

operations.

LikeSAFE,theCSRCisanagencyofthePRC. Chinese

firmsdominatetheprivateequitylandscapedueto

foreignfirmsfacingmorestrictregulatoryandfunding

challenges

than

domestic

firms

like

Beijing

based

Hony

Capital.

Insurancefirmsregulator

TheChinaInsuranceRegulatoryCommission(CIRC):

AuthorisedbythePRC,CIRCregulatestheChinese

insuranceproductsandservicesmarketandmaintains

legalandstableoperationsintheindustry.

TheCIRCplanstoimplementthesecondphaseofitsown

solvencyregulation(equivalentofSolvencyII)by2017.

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Regulatorycompliance

GDPgrowth(%)ofChinaandcomparisons

10

5

0

5

10

15

20

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

China

US

UK

World

Bankcomposition

ChinaBankingRegulatoryCommission

Current

chairman

ShangFulin

Previous

chairman

LiuMingkang(2011)

Address JiaNO.15FinancialStreet,Xicheng

District,Beijing,100140

Website http://www.cbrc.gov.cn/english/in

dex.html

TheCBRCwasestablishedin2003tooverseethebankingsectoras

anindependent,ministrylevelsupervisoryofficethatreports

directlytothestatecouncil. CBRCislargelycomposedofbank

supervisiondepartmentsthatpreviouslyreportedtothePBC.

TheCBRCrequiresreportssuchas:

Balancesheet,P&Lreporting

Capitaladequacy,liquidity,interestrate,large

exposuresreporting

Derivativesandsecuritiesreporting

TheregulatoryobjectiveoftheCBRCisto:

Protecttheinterestofdepositorsandconsumers

throughprudentialandeffectivesupervision

Maintainmarketconfidencethroughprudentialand

effectivesupervision

Enhancepublic

knowledge

of

modern

finance

through

customereducationandinformationdisclosure

Combatfinancialcrime

ThesupervisoryandregulatorycriteriaoftheCBRCareto:

Promotethefinancialstabilityandfacilitatefinancial

innovationatthesametime

Enhancetheinternationalcompetitivenessofthe

Chinesebankingsector

Setappropriatesupervisoryandregulatory

boundariesandrefrainfromunnecessarycontrols

Encouragefairandorderlycompetition

Clearlydefinetheaccountabilityofboththe

supervisorand

the

supervised

institutions

Employsupervisoryresourcesinanefficientandcost

effectivemanner

ExamplebankreturnsrequiredbytheCBRC

Return Name

G01 / Balancesheet

G01Z

/ Loan

qualityreport

G03 / Provisionofasset

G22 / Liquidityratiostatement

S24 /Basic

statement

for

foreign

banks

G04 / P&L

G14

/ Credit

statementIII:top10clientloanlist

G14

/

CreditstatementII:top10ofinterbankplacementlist

G14

/ Credit

statementI:top10ofgrouploanlist

G15 /Top20of

relatedpartytransactionstatement

G21

/ Liquiditygap

G23 /Top10ofdepositclient

G24 /Top10ofinterbank

taken

G32 /Foreignexchangeriskexposure

statement

G41 / Capitalratiostatement

G42 / Onbalancesheetweighted

riskassetscalculationtable

G43 / Offbalancesheetweighted

riskassetscalculationtable

G12 / Loanmovements

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Regulatorycompliance

ExamplebankreturnsrequiredbythePBC

Return Name

B01 /Balancesheet

B02 /P&L

B03 /Otherfinancialdata

B06 /Statementofloan(Classificationinthesizeofthecorporateclients)

B04 /Depositreservemonthlyreport

B05 /P&L

B07 (14 )/Financial

marketmonitoringandstatisticmonthlyreport(14

spreadsheets)

B09 - /CNYincomingand

outgoingpaymentsquarterlyreport(9reports)

B08 /ForeignbankCNYincomingand

outgoingpaymentsstatisticreport

ExamplebankreturnsrequiredbySAFE

Return Name

F01 /FCYloanmovementreport

F03/CNYloan

coveredbyFCYguarantee

F02/Loanscoveredby

overseasguaranteeandguaranteeclaims

LombardRisksREPORTERkeepspacewithregulatory

requirements,automatingendtoendfromdatacollectionto

electronicoutput,sogivingyoutheidealsolutionforall

automatedregulatoryreportingrequirements.

Withfullsupportforkeysupervisorycomputationsand

powerfulworkflow,statusdashboards,graphicalpresentation

oftrendsandvalidations,REPORTERdelivershugesavingsin

timeandeffort,reducesoperationalrisk,anddelivers

significantlyimprovedmanagementinformationand

managementoversight.

BaselIII,EBA/EuropeancommonreportingCOREP

andFINREPandtransactionreporting,aswellas

SolvencyIIfor

the

insurance

marketplace

Regulatorycomputationfromrawdatawith

comprehensiveCapital,LiquidityandLargeExposures

enginesaswellasdetailedstatisticalcomputations

Automationofregulatormandatedandclient

definedvalidationrules

Supportforalltransmissionrequirementsincluding

XBRL,XMLandproprietaryformats

Powerfuldatamanagementfunctionalityovercomes

TheDataProblem:fullyautomatedcleansing,

consolidationandnormalisationofmultipledata

sourcesirrespectiveofdataformat

AutomatedStraightThroughProcessing(STP)

enablesexceptionbasedmanagement,ensuring

regulatoryreporting

is

automated

unless

manual

interventionisneeded

Workflowautomationjobstreamsyourproduction

processenablingsignoffdependenciestobe

achievedunderstricttimetableconditions

Fullsecurityforallprocesses

TrendsandVarianceanalysisprovidesautomated

drilldowncomparisontools,significantlyaccelerating

review,reconciliationandsignoff.Regulators

enquiriesareanticipatedandeasilyanswered

Formoreinformationonanyofthesetopicsvisit

www.lombardrisk.comand/oremail

info@lombardrisk.com

August2012