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The State Council has promulgated the Regulation of the People's Republic of China on the Administration of Foreign-funded Banks (hereinafter referred to as the Regulation) on November 11, 2006, and the Regulation shall come into effect as of December 11, 2006. In order to support the implementation of the Regulation, the CBRC has promulgated the Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-funded Banks (hereinafter referred to as the Detailed Rules) on November 24, 2006. We hereby announce the relevant matters about the implementation of the Regulation and the Detailed Rules as follows: I. As of December 11, 2006, the geographical and client restrictions on the foreign-funded banks in their provision of RMB services shall be cancelled. Foreign-funded banks may, according to the relevant provisions in the Regulation, provide RMB services to all the citizens within the territory of China, and be free from the geographical restrictions for them to provide RMB services within the territory of China. II. Those branches of foreign-funded banks that have been approved to provide RMB services for non-foreign-funded enterprises may, without the approval and after the alteration of business licenses, enlarge their business scope to the absorption of time deposits with each sum at one million yuan or more from the citizens within the territory of China. The specific operational procedures shall be: the foreign bank submits a letter signed by its board chairman or head (CEO or general manager) to the CBRC chairman, and the branch of the foreign bank goes through the formalities for alteration of its business license upon the strength of the confirmation letter issued by the CBRC. Other branches of foreign banks may, according to the Regulation and the Detailed Rules, apply for engaging in the RMB business prescribed in Article 31 of the Regulation. A solely foreign-funded bank or Sino-foreign equity joint bank may, according to the Regulation and the Detailed Rules, apply for engaging in the RMB business prescribed in Article 29 of the Regulation. III. Where the registered capital or operating capital of a solely foreign-funded bank, Sino-foreign equity joint bank or branch of a foreign bank established before the implementation of the Regulation is less than the amount prescribed in the Regulation and the Detailed Rules, if the current potential clients and business scope remain unchanged, its current registered capital or operating capital may keep unchanged. If it changes its shareholders, enlarges the scope of its potential clients or its business scope, or adds outlets, it shall increase the capital according to the relevant provisions on registered capital or operating capital in the Regulation and the Detailed Rules. IV. Those solely foreign-funded banks that are restructured by the branches of foreign banks and are solely funded by their headquarters, as well as the solely foreign-funded banks and Sino-foreign equity joint banks established before the implementation of the Regulation shall, before December 31, 2011, meet the provisions that "the proportion of the balance of loans to the balance of deposits shall not exceed 75%" as prescribed in Item (2) of Article 39 of the Law of the People's Republic of China on Commercial Banks. V. Those solely foreign-funded banks that are restructured by the branches of foreign banks and are solely funded by their headquarters, as well as the solely foreign-funded banks and Sino-foreign equity joint banks established before the implementation of the Regulation shall, before December 31, 2009, meet the provisions that "the proportion of the balance of loans to the same borrower and the balance of capital of the commercial bank shall not exceed 10%" as prescribed in Item (4) of Article 39 of the Law of the People's Republic of China on Commercial Banks. Within the term of extension, the credit-granting quota of a solely foreign-funded bank or Sino-foreign equity joint bank to the same enterprise and the affiliated enterprises thereof shall not exceed 25% of its capital. Those loans for which the branches of foreign banks have concluded agreements before the implementation of the Regulation and have been turned into the loans of the solely foreign-funded bank may not be governed by this prescription within the contractual term. VI. Those solely foreign-funded banks that are restructured by the branches of foreign banks and are solely funded by their headquarters shall establish an independent and comprehensive computer information management system according to the provisions of the CBRC; and those that have not established independent and comprehensive computer information management systems shall meet the legal requirements within two years after it has been approved for business operation. VII. After the Regulation and the Detailed Rules are implemented, the representative offices of foreign banks shall be governed by the Regulation and the Detailed Rules, but not the Measures for the Administration of Representative Offices of Foreign-funded Financial Institutions Stationed in China. No solely foreign-funded bank or Sino-foreign equity joint bank may establish representative offices again. The supervision over and administration of those representative offices of solely foreign-funded banks and Sino-foreign equity joint banks as established before the implementation of the Regulation shall be governed by the Regulation and the Detailed Rules by analogy. In case a foreign bank restructures its branch within the territory of China into a solely foreign-funded bank, its representative offices established within the territory of China may keep unchanged, and the formalities for closing the chief representative office it has established shall be handled when the restructured solely foreign-funded bank begins to operate. Other chief representative offices of the foreign bank shall be closed before June 1, 2007, and their functions shall be transferred to the branch of the foreign bank that is designed as the management bank within the territory of China. VIII. Those exclusively-funded financial companies and equity joint financial companies within the non-enterprise groups that provide services to the general public and are established before the implementation of the Regulation shall be restructured or closed as soon as possible. The administration of the CBRC to them for their existence shall be governed by the provisions on solely foreign-funded banks and Sino-foreign equity joint banks in the Regulation and the Detailed Rules by analogy. IX. The CBRC will accept all kinds of applications of foreign-funded banks according to the relevant provisions in the Regulation and the Detailed Rules. Those applications filed by foreign-funded banks before the implementation of the Regulation shall be still valid, however, the relevant materials shall be supplemented according to the relevant provisions in the Regulation and the Detailed Rules. X. In case a foreign bank establishes any solely foreign-funded bank together with any branch or establishes any Sino-foreign equity joint bank together with any branch within the territory of China before the implementation of the Regulation, it shall, by reference to the relevant provisions in the Regulation and the Detailed Rules as well as the requirements of the CBRC, adjust the form of its operating institutions within the territory of China. XI. In case a foreign-funded bank has not met the provisions on supervision and administration as newly revised in the Regulation and the Detailed Rules yet, it shall meet the said provisions before August 1, 2007. |
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