Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation)
Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation)
Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation)
Oder of the People's Bank of China and the China Banking and Insurance Regulatory Commission [2021] No. 5
September 30, 2021
The Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation), which has been adopted at the eighth executive meeting of the People's Bank of China in 2021 on August 26, 2021, are hereby promulgated and shall come into effect from December 1, 2021.
Yi Gang, Governor of the People's Bank of China
Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission
Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation)
Chapter I General Provisions
Article 1 These Provisions are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, the Law of the People's Republic of China on Banking Supervision and Administration, the Law of the People's Republic of China on Commercial Banks and other laws and regulations, as well as relevant requirements on improving the regulation of systemically important financial institutions, with a view to improving the regulatory framework of China's systemically important financial institutions, clarifying additional regulatory requirements on systemically important banks, and strengthening macro-prudential regulation.
Article 2 These Provisions shall apply to systemically important banks as identified in accordance with the Measures for the Evaluation of Systemically Important Banks.
Article 3 The People's Bank of China ("PBC") shall be responsible for the formulation, monitoring and analysis of the additional regulatory rules on systemically important banks, and shall request the China Banking and Insurance Regulatory Commission ("CBIRC")to take corresponding regulatory measures as appropriate. It may, with the approval of the State Council, inspect and supervise the systemically important banks when necessary. The PBC shall, in conjunction with the CBIRC, ser forth additional regulatory requirements, and serve as the lead organization to set up a crisis management team along with the CBIRC and other entities for the purpose of reviewing the recovery and resolution plans of systemically important banks, and conducting resolvability assessment.
The CBIRC shall carry out macro-prudential regulation of the systemically important banks in accordance with the law. The additional regulatory requirements set forth herein shall not replace the routine regulatory responsibilities of the CBIRC.
Chapter II Additional Regulatory Requirements
Article 4 In addition to the minimum capital requirement and the reserve capital and countercyclical capital requirements, systemically important banks shall also meet certain additional capital requirements, which are to be satisfied by core Tier 1 capital.
Systemically important banks are divided into five groups. Banks in Group 1 to Group 5 shall be respectively subject to an additional capital requirement of 0.25%, 0.5%, 0.75%, 1% and 1.5%. If a bank is concurrently identified as a Chinese and global systemically important bank, the additional capital requirements shall not be superimposed, with the higher capital requirement applying.
The additional capital requirement shall be satisfied on January 1 following the conclusion of a natural business year when a bank enters the list of systemically important banks or ascends to a higher group due to changes in its systemic importance score. When a bank exits the list of systemically important banks or descends into a lower group due to changes in its systemic importance score, the new capital requirement shall apply immediately.
The PBC and the CBIRC may adjust the additional capital requirements according to the macro-economic situation, the changes in financial risks and the development of the banking industry, and report such adjustments to the Financial Stability and Development Committee under the State Council for deliberation before implementation.
Systemically important banks shall have sufficient capital and debt instruments to enhance their total loss-absorbing capacities and be able to absorb losses through write-downs or equity transfers in the event of operational difficulty, so as to realize orderly resolution.
Article 5 Systemically important banks shall establish an internal capital constraint mechanism, improve their endogenous capital accumulation capacity, and effectively give play to the role of capital in guiding and constraining business development. The PBC and the CBIRC shall, under the overall capital management framework, based on the business operational status and risk profiles of systemically important banks and in combination with the results of stress tests, comprehensively assess the capital positions of systemically important banks on a regular basis, perform forward-looking and targeted assessment of their capital shortfalls that may occur in stressful scenarios, and use the assessment results as an important reference for setting capital regulatory requirements.
Article 6 In addition to the leverage ratio requirement, systemically important banks shall meet the additional leverage ratio requirements.
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Oder of the People's Bank of China and the China Banking and Insurance Regulatory Commission [2021] No. 5
September 30, 2021
The Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation), which has been adopted at the eighth executive meeting of the People's Bank of China in 2021 on August 26, 2021, are hereby promulgated and shall come into effect from December 1, 2021.
Yi Gang, Governor of the People's Bank of China
Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission
Additional Regulatory Provisions on Systemically Important Banks (for Trial Implementation)
Chapter I General Provisions
Article 1 These Provisions are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, the Law of the People's Republic of China on Banking Supervision and Administration, the Law of the People's Republic of China on Commercial Banks and other laws and regulations, as well as relevant requirements on improving the regulation of systemically important financial institutions, with a view to improving the regulatory framework of China's systemically important financial institutions, clarifying additional regulatory requirements on systemically important banks, and strengthening macro-prudential regulation.
Article 2 These Provisions shall apply to systemically important banks as identified in accordance with the Measures for the Evaluation of Systemically Important Banks.
Article 3 The People's Bank of China ("PBC") shall be responsible for the formulation, monitoring and analysis of the additional regulatory rules on systemically important banks, and shall request the China Banking and Insurance Regulatory Commission ("CBIRC")to take corresponding regulatory measures as appropriate. It may, with the approval of the State Council, inspect and supervise the systemically important banks when necessary. The PBC shall, in conjunction with the CBIRC, ser forth additional regulatory requirements, and serve as the lead organization to set up a crisis management team along with the CBIRC and other entities for the purpose of reviewing the recovery and resolution plans of systemically important banks, and conducting resolvability assessment.
The CBIRC shall carry out macro-prudential regulation of the systemically important banks in accordance with the law. The additional regulatory requirements set forth herein shall not replace the routine regulatory responsibilities of the CBIRC.
Chapter II Additional Regulatory Requirements
Article 4 In addition to the minimum capital requirement and the reserve capital and countercyclical capital requirements, systemically important banks shall also meet certain additional capital requirements, which are to be satisfied by core Tier 1 capital.
Systemically important banks are divided into five groups. Banks in Group 1 to Group 5 shall be respectively subject to an additional capital requirement of 0.25%, 0.5%, 0.75%, 1% and 1.5%. If a bank is concurrently identified as a Chinese and global systemically important bank, the additional capital requirements shall not be superimposed, with the higher capital requirement applying.
The additional capital requirement shall be satisfied on January 1 following the conclusion of a natural business year when a bank enters the list of systemically important banks or ascends to a higher group due to changes in its systemic importance score. When a bank exits the list of systemically important banks or descends into a lower group due to changes in its systemic importance score, the new capital requirement shall apply immediately.
The PBC and the CBIRC may adjust the additional capital requirements according to the macro-economic situation, the changes in financial risks and the development of the banking industry, and report such adjustments to the Financial Stability and Development Committee under the State Council for deliberation before implementation.
Systemically important banks shall have sufficient capital and debt instruments to enhance their total loss-absorbing capacities and be able to absorb losses through write-downs or equity transfers in the event of operational difficulty, so as to realize orderly resolution.
Article 5 Systemically important banks shall establish an internal capital constraint mechanism, improve their endogenous capital accumulation capacity, and effectively give play to the role of capital in guiding and constraining business development. The PBC and the CBIRC shall, under the overall capital management framework, based on the business operational status and risk profiles of systemically important banks and in combination with the results of stress tests, comprehensively assess the capital positions of systemically important banks on a regular basis, perform forward-looking and targeted assessment of their capital shortfalls that may occur in stressful scenarios, and use the assessment results as an important reference for setting capital regulatory requirements.
Article 6 In addition to the leverage ratio requirement, systemically important banks shall meet the additional leverage ratio requirements.
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