Brief Report
---On China Banking Sector
March 30, 2019
Contents ：
1. Finance Regulatory Structure
2. Main Legal Provisions and Rules 3. Annual Statistics
4. Challenges
1.1 Financial Stability and Development Committee
(Headed by Vice-Premier. Have a higher political ranking than the various government ministries already involved in financial oversight.)
Formulate policies on systemic financial risk management and maintaining China’s financial security, and give local governments guidelines on financial development.
To supervise and question financial regulators and local governments.
1.2 Ministry of Finance of P.R.China
1.3 People’s Bank of China(PBC) Central Bank
Aside from the typical central bank responsibility for monetary policy, the PBC's role is to reduce overall risk and promote the stability of the financial system. Regulates lending and foreign exchange between banks and supervises the payment and settlement system of the country.
1.4 China Banking Insurance Regulatory Commission (CBIRC)
1.5 China Securities Regulatory Commision (CSRC)
Two domestic stock exchanges, the Shanghai Stock Exchange (SHSE) and Shenzhen Stock Exchange (SZSE) were established in 1990.11.HKSE.
1.6 State administration of Foreign Exchange
1 Finance Regulatory Structure
• Draft the rules and regulations governing the banking and insurance sectors in China.
• Conducts examinations and oversight of banks and insurers.
• Collects and publishes statistics on the banking system.
• Approves the establishment or expansion of banks.
• Resolves potential liquidity, solvency, or other problems that might emerge at individual banks.
• Other functions.
2 Main Legal Provisions and Rules
• Law of the People's Republic of China on the People's Bank of China 2003
• Law of the People's Republic of China on Commercial Banks 2015
• Law of the People’s Republic of China on Banking Regulation and Supervision 2006
• The Securities Law of the People's Republic of China 1998
• Trust Law of the People’s Republic of China 2001
• The Basel III Accord 2013
• Guiding Opinions on Promoting the Healthy Development of Internet Finance (Guiding Opinions). 2015
• CBIRC Office Notice on Relevant Matters in Relation to Further Opening the Market to Foreign Invested Banks 2018
• CBIRC Measures for Accelerating the Implementation of Banking Sector and Insurance
Sector Opening Up 2018
2 Main Legal Provisions and Rules
• Guidelines on Online Lending Fund Depository Business 2017
• Guiding Opinion on Improving the Quality and Efficiency of the Banking Sector to Serve the Real Economy 2017
• Guiding Opinion on Risk Prevention and Control of the Banking Sector 2017
• Notice on Strengthening Online Information Security and Customer Information Protection 2017
• Guidance Opinions Concerning Standardizing the Non-home Unlicensed Institutions of Banking Sector Financial Institutions 2018.12.29 (Eg:City bank)
• Guidance Development of the Country’s Rural Commercial Banks to Serve Rural Areas as
well as Micro and Small-sized Enterprises.2019.1(Eg:Rural commercial bank back to their
“original mandate.”)
• Notice on 2019 Banking Insurance Industry to Serve the Rural Revitalization and Poverty
Alleviation.
2 Main Regulatory Instruments
1) Bank Reserve Coverage Ratio: ≥ 150%
2) Liquidity Coverage Ratio:100%
3) Capital adequacy ratio: 5%,6%,8%
eg: Countercyclical buffer 0-2.5%
Capital buffer:1%
4) Leverage Ratio: ≥ 4%
Approach: Prudential risk-based supervision, especially “ensuring accuracy of
loan classification, adequacy of loss provisions, the true and fair reporting of
profit & loss and meeting the capital adequacy requirements.”
3 Annual Statistics- (3.1)
Number of staff Number of banks
1 Large commercial banks 1,651,175 5
2 The CDB and Policy banks 64,665 3
3 Joint-stock commercial banks 479,343 12
4 City commercial banks 420,180 134
5 Private banks 4,757 17
6 Rural credit cooperatives 254,973 965
7 Rural commercial banks 602,849 1,262
8 Rural cooperative banks 11,580 33
9 Finance companies of corporate groups 12,244 247
10 Trust companies 20,864 68
11 Financial leasing companies 6,178 66
12 Auto financing companies 8,874 25
13 Money brokerage firms 1,014 5
14 Consumer finance companies 78,485 22
15 Banking asset management companies 8,315 4
16 Foreign finance institutions 45,609 39
17 Other institutions 499,371 1,625
18 Banking institutions in total 4,170,476 4,532
Institutions/Items
Number of legal entities and staff of banking Institutions （ As of end-2017）
Blue:Other institutions include new-type rural financing institutions,postal saving banks and Sino-German Bausparksse.
Other financial intitutions such as the China Trust Protection Fund Corporation and China Trust Registration Corporation are not included.
Yellow:Domestic subsidiaries not included
History ：
In the early 1980s, the government opened up the banking system and allowed four state-owned specialized banks to accept deposits and conduct banking business. These five specialized banks are the Industrial & Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BOC), Bank of Communications (BoCom), and
Agricultural Bank of China (ABC).
In 1994, the Chinese government established three more banks, each of which is dedicated to a specific lending purpose. These policymaking banks include the Agricultural Development Bank of China (ADBC), the China
Development Bank (CDB) and the Export-Import Bank of China. The four specialized banks have all conducted initial public offerings (IPOs) and have varying degrees of ownership by the public. Despite these IPOs, the banks are all still majority owned by the Chinese government.
China has also allowed a dozen joint stock commercial banking institutions and more than a hundred city commercial banks to operate in the country. There are also banks in China dedicated to rural areas of the country. Foreign banks were also allowed to establish branches in China and to make strategic minority investments in many of the state- owned commercial banks.
The total assets of the Chinese banking system were 254.3 trillion yuan, or US$14.4 trillion, in mid-2018. The five specialized banks controlled 90.4 trillion yuan or approximately
35.5%
of these assets.Large commercial banks
40%
The CDB and Policy banks 2%
Joint-stock commercial banks 11%
City commercial banks 10%
Private banks 0%
Rural credit cooperatives 6%
Rural commercial banks 14%
Trust companies 1%
Consumer finance companies 2%
Foreign finance institutions 1%
Other institutions 12%
Banking sector of entities' staff ratio graph
Large commercial banks The CDB and Policy banks Joint-stock commercial banks City commercial banks
Private banks Rural credit cooperatives Rural commercial banks Rural cooperative banks
Finance companies of corporate groups Trust companies Financial leasing companies Auto financing companies Money brokerage firms Consumer finance companies Banking asset management companies Foreign finance institutions Other institutions
3 Annual Statistics- (3.2)
Institutions/Year 2007 2008 2009 2010 1011 2012 2013 2014 2015 2016 2017 Banking institutions
Return on asset 0.9 1.0 0.9 1.0 1.2 1.2 1.2 1.2 1.2 1.0 0.9 Return on equity 16.7 17.1 16.2 17.5 19.2 19.0 18.5 17.1 14.3 12.6 11.9 Commercial banks
Return on asset 0.9 1.1 1.0 1.1 1.3 1.3 1.3 1.2 1.1 1.0 0.9 Return on equity 16.7 19.5 18.0 19.2 20.4 19.8 19.2 17.6 15.0 13.4 12.6
Return of banking institutions(2007-2017)
3. Annual Statistics- (3.2)
Items\Year 2010 2011 2012 2013 2014 2015 2016 2017 CAR 12.2 12.7 13.3 9.9 10.8 11.3 11.2 11.3 Core CAR 10.1 10.2 10.6 12.2 13.2 13.5 13.3 13.6
CAR of commercial banks (2010-2017)
Note：Capital Rules of Commercial Banks（Provisonal）was implemented on Jan 1，2013 and the original Rules for the Capital Adequacy Rate of Commercial Banks was abolished at the same time. As a result,since the first quarter of 2013, the related statistics of CAR released was
calculated according to the new Rules.
3. Annual Statistics- (3.3)
3. Annual Statistics- (3.4)
✓ Interet rate(5-year deposit):
3. Statistics- (3.5)
3. Statistics- (3.6)
2019 Domestic Bank Loan Interest Rate Adjustment List
Bank Short-term loan
Medium and long-term
loans
Personal housing provident fund loan
Discount
Period 6months (inclusive)
6 months to 1 year (inclusive)
1 to 3 years (inclusive)
3 to 5 years (inclusive)
More than 5 years
Less than 5 years (inclusive)
More than 5 years
Central bank
4.35 4.35 4.75 4.75 4.9 2.75 3.25
ICBC
4.35 4.35 4.75 4.75 4.9 2.75 3.25
Shenzhen Development
Bank
5.6 6 6.15 6.4 6.55 4 4.5
Determine the
rediscount rate as the lower limit
Haerbin Bank
4.6 4.6 5 5 5.15 2.75 3.25
Dalian Bank
5.35 5.35 5.75 5.75 5.9 4 4.5
3. Annual Statistics
4 Challenges
• Consumer expectations.
These days it’s all about the customer experience, and many banks are feeling pressure because they are not delivering the level of service that consumers are demanding, especially in regards totechnology.
• Increasing competition from financial technology companies.
Financial technology (FinTech) companies are usually start-up companies based on using software to provide financial services. The increasing popularity of FinTech companies is disrupting the waytraditional banking has been done. This creates a big
challenge for traditional banks because they are not able to adjust quickly to the changes – not just in technology, but also in operations, culture, and other facets of the industry.
Virtual Assistance/Use of Multiple Channels to Reach New Customers/4.0 Bank is coming.
• Proactively managing risk, regulations
and capital.
Conclusion ：
Banks should focus on customers, enhance trust as
financial intermediaries, facilitate capital flows, and
provide credit to the global economy with data as the
bond that sustains the amalgam of technologies—AI,
automation, cloud, core modernization, etc.—best
suited for the purpose.
CONTACT US
Asian Financial Cooperation Association(AFCA)
Address: 11F, Building 2,Yuetan South Street, Xicheng District, Beijing, P.R. China
Email ： membership@afca-asia.org Website: www.afca-asia.org
Weibo Official Account Wechat Official Account: AFCA_NEWS
Thanks
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