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MNI (London)

China has toughened regulations on large holding corporations that control financial firms in a bid to curb risks, including containing a build-up of bad loans held by small banks, the People's Bank of China Deputy Governor Pan Gongsheng told reporters on Monday.

Pan spoke after the PBOC on Sunday launched rules anticipated by the market scrutinizing financial-holding companies (FHCs) that control two or more financial businesses in the country. Effective Nov. 1, the new rules require licenses for setting up FHCs, targeting large firms controlling banks and having sector assets exceeding CNY500 billion, or those without bank control but have financial assets exceeding CNY100 billion.

Authorities are plugging loopholes to reduce risks from over-expansion by FHCs and emphasizing separate operations, Pan said, noting that some big players such as Mingtian Group, Anbang Insurance Group, have caused damages due to falsified capital injections and illegal activities, even as many others, such as Ant Group and China Evergrande Group, helped improve financial service.

Regulators have steadily diffused exposed risks and worked on preventing other potential risks, Pan said giving as examples some small banks in Shanxi province.

The PBOC has give companies a transition period before November to allow an orderly introduction of the new rules, Pan said.
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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