The China Banking and Insurance Regulatory Commission (CBIRC) has issued a set of rules to assess the operational risks of foreign banks’ Chinese branches, as well as the level of support they receive from their global headquarters. The Chinese regulators said the rating system is designed to better allocate supervisory resources and promote the healthy development of foreign banks in China. Based on the annual assessment results, the CBIRC will instruct poorly rated foreign banks to improve their corporate governance. For poorly-rated foreign banks, Chinese regulators will take actions such as restricting capital expatriation, demanding fresh operating capital, and suspending the approval of new branches. Official data showed that foreign banks, including HSBC and Citi, have set up more than 40 China units, and over 100 local branches in China.
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