CHINA-ECONOMY: NEW DRAFT REGULATIONS FOR FOREIGN BANKS RELEASED ON OCTOBER 25
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China’s banking regulator (CBIRC) released new draft regulations on October 25 inviting comments until November 25 and opening the financial sector wider. These propose that foreign banks would be able to: (i) Underwrite government bonds; (ii) take deposits of RMB 500,000 or more – down from a previous threshold of RMB 1 million, meaning that foreign banks have a wider potential pool of customers; (iii) Increase the amount of their assets that can be invested outside of low-yielding fixed-term deposits – the requirement used to be that 30% of operational funds should be invested in these low risk instruments; and (iv) Lower their capital adequacy ratios – specifically, foreign banks may be exempt from an 8% capital adequacy ratio if their home country requires a lower ratio.
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