China to better regulate financial holding companies' transactions
FILE PHOTO: Paramilitary police officers stand guard in front of the headquarters of the People's Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang/File Photo
BEIJING : China's central bank on Thursday issued rules managing financial holding companies' affiliated transactions, to help curtail risks and ensure financial stability, according to a statement on the regulator's website.
The rules, which follow a draft version in August, will promote stable and healthy operation of financial holding companies and prevent financial risks, the People's Bank of China said. The rules take effect on March 1.
Improper transfer of interests through financial holding companies' transactions with related parties will not be allowed. The firms are also barred from designing complex structured products for affiliated transactions to hide risks and sidestep supervision.
Financial holding firms will be required to improve the management, reporting and disclosure mechanisms of affiliated transactions.
China in 2020 required nonfinancial conglomerates that own multiple units in the financial sector to register as financial holding companies. That was part of efforts to tighten oversight of companies that sidestepped regulatory supervision to expand and posed systemic financial risks.
Regulators in March last year approved the first batch of financial holding firms - China CITIC Financial Holdings and Beijing municipal government-owned Beijing Financial Holdings Group.
In September, the central bank granted a third license to state-owned China Merchants Group.
