China is making plans to regulate its financial holding conglomerates, and related regulations are in the pipeline, the Securities Daily reported on Thursday.
According to the report, the country now has over 53 financial holding platforms as an estimate, but the actual number could be much higher than that.
Mr. Lian Ping, the chief economist of the Bank of Communications, said that most of the conglomerates are under the supervision of the China Banking Regulatory Commission (CBRC).
"However, some private or local financial holdings set up by industrial investments, which are supervised by their corresponding industry rather than financial authorities, could hold a greater potential threat to financial stability," he said.
Meanwhile, ambiguous rights distributions of equities in financial institutions like commercial banks have also harmed the regulations on financial holdings.
Early this year, the CBRC issued regulations on commercial banks' equities management to lower their financial leverage.
Analysts said the regulations could prevent benefit and risk transfers to shareholders in businesses and protect the interests of the commercial banks, the other shareholders, and their clients.
These regulations would ensure the overall stability of commercial banks despite the changes among their investors and holders, and build a separation barrier for risks between commercial banks.
Regarding the supervision of financial holdings, Mr. Lian said the country had better speed up the creation of related laws and enhance its cross-industry supervisions.
He also suggested a pure financial holding operational style for this industry, in which equities investments, personnel management, and strategic plans will be under the charge of the parent companies, while their subsidiaries run other businesses.
"This will help to isolate financial risks and fully take advantage of their comprehensive operations," said Mr. Lian.
According to the report, the country now has over 53 financial holding platforms as an estimate, but the actual number could be much higher than that.
Mr. Lian Ping, the chief economist of the Bank of Communications, said that most of the conglomerates are under the supervision of the China Banking Regulatory Commission (CBRC).
"However, some private or local financial holdings set up by industrial investments, which are supervised by their corresponding industry rather than financial authorities, could hold a greater potential threat to financial stability," he said.
Meanwhile, ambiguous rights distributions of equities in financial institutions like commercial banks have also harmed the regulations on financial holdings.
Early this year, the CBRC issued regulations on commercial banks' equities management to lower their financial leverage.
Analysts said the regulations could prevent benefit and risk transfers to shareholders in businesses and protect the interests of the commercial banks, the other shareholders, and their clients.
These regulations would ensure the overall stability of commercial banks despite the changes among their investors and holders, and build a separation barrier for risks between commercial banks.
Regarding the supervision of financial holdings, Mr. Lian said the country had better speed up the creation of related laws and enhance its cross-industry supervisions.
He also suggested a pure financial holding operational style for this industry, in which equities investments, personnel management, and strategic plans will be under the charge of the parent companies, while their subsidiaries run other businesses.
"This will help to isolate financial risks and fully take advantage of their comprehensive operations," said Mr. Lian.
Latest comments