On October 15, 2019, the State Council of PRC announced the revision of the Regulation of the People’s Republic of China on Administration of Foreign-funded Insurance Companies and the Regulation of the People’s Republic of China on the Administration of Foreign-funded Banks.
There are four primary amendments to the Regulation on the Administration of Foreign-funded Banks, including:
1. Liberalizing requirements on shareholders that plan to set up foreign-invested banks in China and requirements on foreign banks that plan branches in China;
2. Allowing foreign banks to simultaneously set up branches as well as wholly foreign-owned banks — or branches and Sino-foreign joint venture banks — in China;
3. Easing restrictions on foreign banking business
4. Lowering their branches’ threshold of fixed-term renminbi deposits to 500,000 yuan from 1 million (to $70,610 from $141,220) per deposit.
The government has relaxed market access for foreign insurance firms, such as removing requirements that companies that apply to establish foreign-invested insurers in China “must operate insurance business for at least 30 years” and “establish representative office in the territory of China for at least two years”, in order to be approved to set up foreign-funded insurance companies in China.
These new regulations are believed to provide more development room for smaller foreign banks in China, which have their expertise in specialized areas and detailed implementation measures for these two regulations will be published soon.
According to official statistics, the assets of foreign banks and foreign insurers in China accounted for 1.64 per cent and 6.36 per cent, respectively, of the total assets of the Chinese banking and insurance sectors.
By the end of the second quarter, foreign banks had set up 41 locally incorporated foreign-invested banks, 116 branches and 151 representative offices in China. Foreign insurers had established 59 locally incorporated foreign insurers and 131 representative offices in the country.