BOFIT Viikkokatsaus / BOFIT Weekly Review 2019/19
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), announced a dozen measures at the beginning of May intended to open up access to Chinese markets. Ownership limits in the banking sector and foreign firm size requirements would be dropped, while foreign banks would no longer need to petition for permission to engage in yuan-based operations.
The measures include elimination of certain qualification requirements for foreign insurance groups, including ceilings on ownership shares and provision of a 30-year operating history. In addition, the government will make it easier to set up consumer financing firms. CBIRC says that the new rules for foreign banks and insurance companies will soon be published. The measures, which respond to China’s promises to open up access to its financial markets, are intended to help with US trade talks.
Some foreign firms were recently granted licences to expand operations in China. They include the Swiss UBS, which increased its stake in its Chinese joint venture UBS Securities to 51 %; the German insurer Allianz, which got the go-ahead to found the first foreign-held insurance company in China; and American ratings giant Standard and Poor’s, which can now operate as a credit ratings agency in China. The Dutch ING Group, which has a joint venture with the Bank of Beijing, seeks dominant shareholder status. If the regulators approve the joint venture, it would create the first Chinese bank in which a foreign entity holds the majority stake. Credit card issuer American Express finalised its licencing process November, gaining the right to operate in China under the form of a joint venture with a local entity. According to media reports, Visa and Mastercard have long sought operating licences. Mastercard is reportedly establishing a joint venture with a Chinese partner to ease its licencing process.