China bank shareholders under CBRC scrutiny

BEIJING: The China Banking Regulatory Commission (CBRC) has ordered shareholders that have acquired more than five per cent stakes in commercial banks through the use of financial products like insurance and asset management schemes to reduce their holdings within a year.

The regulation made public late on Friday, is the latest in a series of measures to control risk and excessive leverage in the financial system, with everything from doggy lending practices to shadow banking under the microscope.

CBRC also “strictly forbids shareholders from imposing inappropriate control over banks and seeking illegitimate interests”.

It would target small and midtier banks’ shareholding structures and conduct on-site checks this year, it said.

The rules will force conglomerates like Anbang Insurance, which has built up stakes in commercial lenders through funds raised from short-term, highyielding universal life insurance products, to trim their holdings. The new rules follow guidelines released in January that required major shareholders to disclose their ownership structures up to the ultimate beneficial holder.

CBRC was drafting another set of new rules on shareholding custodianship to further increase transparency and standardise the management of banks’ shareholding structures, it added.