Banking News
- Rules drafted for banks' global reach
Date: 2-Nov-2007 Sources: (Shenzhen Daily)
THE government is considering issuing new rules to tighten risk controls in its banking sector that is diversifying rapidly into other services such as insurance, fund management and investment banking at home and abroad, the Shanghai Securities News said Thursday.
The China Banking Regulatory Commission (CBRC) has finished drafting the rules and is soliciting feedback from the public, the newspaper said, adding that the public has until Nov. 16 to comment.
'With the deepening reform of our country's major banks, their equity structure has turned increasingly complicated as they have set up many layers of holding firms abroad and acquired overseas financial institutions,'the newspaper said.
'Major banks also have stakes in insurance, fund, securities companies and industrial firms. This will lead to a sharp increase in internal transactions and that is posing a potential threat to the banking groups that are the parents of the units,'it said.
The proposed new rules would allow CBRC to oversee units directly or indirectly controlled by domestic banks, the newspaper said.
Domestic financial institutions are scrambling to diversify their operations. For example, many banks have set up joint venture mutual fund companies. Some of them have announced major overseas acquisitions.
Industrial & Commercial Bank of China (ICBC), the country's largest lender, said last week it would pay US$5.6 billion for a 20 percent stake in South Africa's Standard Bank Group.
CITIC Securities Co., part of the CITIC Group that controls a sprawling empire spanning commercial banking, media and real estate, has just signed a deal to swap stakes with U.S. investment bank Bear Stearns Cos.
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