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In order to perfect the function of wholly state-owned commercial banks in providing services for foreign exchange business, and to promote sound development of their foreign exchange business, the PBC has decided to resume examining and approving the application of wholly state-owned commercial banks' subsidiaries (hereinafter the Subsidiaries) for beginning or opening additional foreign exchange business. Circular on relevant issues are formulated as follows: I. Jurisdiction of the PBC's subsidiaries to approve foreign exchange businesses According to Article (2) of Financial Supervision Responsibility System of the PBC, branches and banking departments of the PBC shall be responsible for examining and approving the application of the Subsidiaries for beginning or opening additional foreign exchange business. The branches and banking departments may authorize the key sub-branches under their jurisdiction to examine and approve the application of the Subsidiaries for beginning or opening additional foreign exchange businesses according to the supervising ability of the sub-branches. In view of particularity, if businesses of foreign exchange purchase and sales is applied for by the Subsidiaries, the application shall be jointly signed by subsidiaries of the PBC and the State Administration of Foreign Exchange (the SAFE) at the same level, and the SAFE has veto power. The detailed procedure on examining and approving the application for business of foreign exchange purchase and sales shall be jointly formulated by the subsidiaries of the PBC and the SAFE at the same level according to the principle of being convenient for the Subsidiaries. II. Preconditions for beginning or opening additional foreign exchange business The Subsidiaries, when applying for beginning or opening additional foreign exchange business, shall meet following preconditions: (1) complying with laws, regulations, and financial rules; not being punished by the PBC, the SAFE, or other administrative departments in recent three years; (2) having strong internal control mechanism, and effective system of identifying, supervising, measuring and controlling risks of any kind; (3) sound operation with key asset-liability indicators of asset quality and liquidity being rational; (4) possessing foreign exchange business managing and operating personnel qualified by the PBC; (5) possessing suitable business premises and necessary facilities. III. Documents need to be submitted when applying for beginning or opening additional foreign exchange business The Subsidiaries, when applying for beginning or opening additional foreign exchange businesses, shall submit following documents (three sets) to the corresponding subsidiary of the PBC. (1) The application for beginning or opening additional foreign exchange businesses shall at least include following basic elements: a. detailed definition of applied business products; b. risks of applied business products and measures to prevent them; c. development of applied products by other institutions in the same system that the applicant belongs to; d. loss and profit projection for applied products; and e. plan for developing and employing new products. (2) photocopies of the original and duplicate business permit issued by the PBC; (3) inspection reports and disposal decisions by the PBC, the SAFE, and external audit institutions on the bank's foreign exchange business in recent three years; (4) balance sheet, loss and profit statement and analysis report on the bank's business in the previous year; (5) valid approval documents by its headquarter; (6) rules and operational procedures on applied products; (7) key managing and operating personnel for applied products; (8) a brief description of its business premises and facilities; (9) any other documents and materials required by the PBC. IV. Scope of foreign exchange business Before new rules are promulgated by the PBC, the scope of foreign exchange business of the Subsidiaries shall be implemented according to Rules on the Scope of Foreign Exchange Business of Banks at Each Level (attachment of [98] huiguanhaizi No. 048) promulgated by the SAFE. V. Principle for examining and approving foreign exchange business (1) Subsidiaries of the PBC at each level shall be rigid and serious in examining and approving in the light of the applicants' ability of risk control. Rushing headlong into mass action is prohibited. (2) Approvals by the subsidiaries of the PBC at each level shall be filed for record with the upper-level. (3) Relevant provisions on the administration of foreign exchange business promulgated by the SAFE shall still be effective. Article 6, 10, 11, 13 on approving procedures for foreign exchange business of Rules on the Administration of Foreign Exchange Business of Banks promulgated by the SAFE in September, 1997, except the preconditions need to be met and the documents need to be submitted by the applicant, shall be effective before new rules being promulgated by the PBC. The administrative department mentioned in other articles shall be the PBC instead of the SAFE Relevant regulations on the administration of foreign exchange business promulgated by the SAFE before the foreign exchange supervision function being shifted to the PBC shall be effective before new rules being promulgated by the PBC. |
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