BEIJING, Sept 14 (Reuters) - China has issued new rules to
regulate financial holding companies, in its latest move to
prevent systematic risks to the nation's vast financial sector.
The new rules, announced on Sunday, were rolled out as a
small number of companies expanded blindly into the financial
sector without isolation mechanisms and while accumulating
risks, the People's Bank of China (PBOC) said in a statement.
"Financial holding companies have already existed in our
country, but those companies have not been included in the
supervision framework, and there is a loophole in regulations,"
Pan Gongsheng, PBOC's vice governor, told a briefing in Beijing
Pan named the state-owned CITIC Group, China Everbright
Group and China Merchants Group as eligible financial holding
entities, as well as local government-backed Shanghai
International Group, Beijing Financial Holdings Group, and the
fintech giant Ant Financial.
Jack Ma's Ant Financial, now renamed Ant Group, is seeking
dual listings in Hong Kong and Shanghai.
Pan criticised a small number of firms, including Tomorrow
Holdings, Anbang Group and CEFC China Energy Co, for expanding
into the financial sector using a complex web of shareholding
structures, and falsifying capital injections and misusing funds
from financial institutions.
The new regulation will put up a firewall between the
industrial sector and the financial sector, to "prevent
cross-institution, cross-market, and cross-sector contagion
risks," Pan said.
Companies must have at least 5 billion yuan ($731.74
million) in capital to be licensed as financial holding firms,
according to the rules.
Moreover, companies that hold banking units will need to
have at least 500 billion yuan in total assets, and those that
do not hold banking units should have at least 100 billion yuan.
The regulation will take effect on November 1, 2020, and
will give companies a one year grace period.
If financial holding firms fail to meet the new rules, the
PBOC can force a share sale. The PBOC may also propose
anti-trust investigation to the State Council against financial
holdings if they affect financial stability or violate fair
Pan also noted China has issued rules on capital and
financing management for key real estate companies, a move aimed
at enhancing regulation and transparency of real estate
($1 = 6.8330 Chinese yuan renminbi)
(Reporting by Cheng Leng, Kevin Yao, Zhang Yan and Hallie Gu;
Editing by Alexandra Hudson)