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the China Banking Regulatory Commission
Decree of the China Banking Regulatory Commission
No.4
The Detailed Rules for the Implementation of the Regulation of the People’s Republic of China on the Administration of Foreign-funded
Financial Institutions, which were adopted at the 16th Chairmen’s meeting of China Banking Regulatory Commission, are hereby promulgated
and shall go into effect as of September 1, 2004.
Chairman of the China Banking Regulatory Commission Liu Mingkang
July, 26, 2004
Detailed Rules for the Implementation of the Regulation of the People’s Republic of China on the Administration of Foreign-funded
Financial Institutions
Chapter I General Provisions
Article 1
The present Detailed Rules have been formulated according to the Banking Administration Law of the People’s Republic of China, the
Law of the People’s Republic of China on Commercial Banks and the Regulation of the People’s Republic of China on the Administration
of Foreign-funded Financial Institutions (hereinafter referred to as the Regulation).
Article 2
The “foreign capital” as used in Item 1and 4 of Article 2 of the Regulation refers to the capital contributed by institutions registered
outside the territory of the People’s Republic of China.
The “foreign bank” as mentioned in item (2) refers to a commercial bank that is registered outside the territory of the People’s Republic
of China and that are approved or accredited by the financial supervisory authority of the place where it is located.
The “foreign financial institution” as mentioned in Item 3 and 5 refer to a financial institution that is registered outside the territory
of the People’s Republic of China and is approved or accredited by the financial supervisory authority of the places where it is
located.
Article 3
The “foreign-funded legal entity” as mentioned in the present Detailed Rules refers to a wholly foreign-funded bank, a Sino-foreign
joint equity bank, a wholly foreign-funded finance company and a Sino-foreign joint equity finance company as mentioned in the Regulation.
Article 4
China Banking Regulatory Commission (hereinafter referred to as the CBRC) is the competent authority responsible for administering
and supervising the foreign-funded financial institutions. The local offices of the CBRC shall be responsible for the routine supervision
and administration of the foreign-funded financial institutions within their respective jurisdiction.
Chapter II Establishment and Registration
Article 5
The “prudential requirements” as mentioned in Articles 6 through 8 shall include but not limited to the following:
(1)
Sound corporate governance structure;
(2)
Persistently sound operational performance;
(3)
Financial statements drawn up in line with the prudent accounting principle, and clean report by the accounting firm on the financial
statements for three consecutive years prior to filing the application;
(4)
No record of serious violation of laws or regulations, and no record of bad credit;
(5)
Favorable reputation in the banking sector and good social image;
(6)
Stable political and economic situation in the home country or region of the applicant in the case of the establishment of a branch
by a foreign bank, and a sound communication mechanism between the home financial supervisory authority and the CBRC; and
(7)
Other relevant requirements on investors in the financial sector as provided for in the laws and regulations.
Article 6
The shareholder or the largest shareholder of a wholly foreign-funded bank established under Article 6 of the Regulation must be
a commercial bank.
The sole shareholder or the largest shareholder of a wholly foreign-funded finance company established under Article 6 of the Regulation
must be a commercial bank or a finance company.
The capital adequacy ratio of the commercial bank as mentioned in this Article may not be lower than 8%.
The Item 2 and 3 of Article 6 of the Regulation shall apply to the sole shareholder or the largest shareholder.
Article 7
As for a joint-equity bank established under Article 8 of the Regulation, its sole shareholder of foreign party or largest shareholder
of foreign party must be a commercial bank.
As for a joint-equity finance company established under Article 8 of the Regulation, its sole shareholder of foreign party or largest
shareholder of foreign party must be a commercial bank or a finance company.
The capital adequacy ratio of the commercial bank as mentioned in this Article may not be lower than 8%.
The Item 2 and 3 of Article 8 of the Regulation shall apply to the sole foreign shareholder of the foreign party or the largest foreign
shareholder.
Article 8
The “representative office established by the applicant or foreign party within the territory of China” refers to a representative
office established under the supervision of the CBRC. The “end of the year prior to the submission of the application” refers to
the end of the fiscal year prior to the date of application.
Article 9
The “prudential requirements” as mentioned in Article 20 of the Regulation and Articles 16, 17 and 40 of the present Detailed Rules
shall include but not limited to the following:
(1)
Sound cooperate governance structure;
(2)
Sound risk management system;
(3)
Sound internal control system;
(4)
Effective information management system;
(5)
The managerial personnel having good expertise and management capacity;
(6)
Persistently sound operational performances and good asset quality of the applicant;
(7)
No record of serious violation of laws or regulations, and;
(8)
Effective measures for fighting money laundering.
Article 10
The “feasibility study report” as mentioned in Articles 9 through 11 of the Regulation and Article 18 of the present Detailed Rules
shall at least include the basic information of the applicant, the analysis of the market prospect of the institution to be established,
the business development plan of the institution to be established, as well as the organizational framework, and projection of asset-liability
size and profit for the first three years, etc.
The “name of a to-be-established branch of a foreign bank” as mentioned in Item 1 of Article 10 of the Regulation shall include
both the Chinese name and the foreign name, and the Chinese name shall indicate the nationality and form of liabilities of the foreign
bank.
Article 11
The “photocopy of business license” as mentioned in the Regulation and the present Detailed Rules refers to the photocopy of the business
license or other approval document on financial business. The photocopy of business license, power of attorney, letter from the foreign
bank to discharge the tax and debt obligation of its branch bank in China, etc. shall be either notarized by an institution accredited
by the home country or region or certified by the embassy or consulate of the People’s Republic of China in that country, except
the photocopy of business license as issued by the Chinese industry and commerce administration authority.
Article 12
The “relevant materials about the Chinese party” as mentioned in item 6 of Article 11 of the Regulation refers to the photocopy
of business license of the Chinese party and its annual reports of the latest 3 years.
Article 13
The “annual reports” as mentioned in the Regulation and the present Detailed Rules shall be audited with the auditing opinions issued
by the accredited accounting firm of the home country or region of the applicant. Annual reports printed in a language other than
Chinese or English shall be accompanied by Chinese or English translations.
Article 14
The “other materials” as mentioned in Articles 9 through 11 of the Regulation shall include but not limited to the following:
(1)
An applicant applying for establishing a foreign-funded institution for the first time shall provide the information about the financial
system and the financial supervision laws and regulations of it home country or region;
(2)
The articles of association of the applicant;
(3)
The organizational chart of the applicant and the group it belongs to, the name list of the major shareholders, overseas branches
and associated companies;
(4)
Policies or rules of the applicant on fighting money laundering.
Article 15
Except the annual reports, all application materials as required in the present Detailed Rules, if written in a foreign language,
shall be accompanied by Chinese translations.
Article 16
Where a foreign bank intends to establish a new branch in China, its existing branches in China shall meet the prudential requirements
as specified by the CBRC and the conditions as provided for in Item 2, 3, 4 and 5 of Article 7 of the Regulation.
Article 17
A wholly foreign-funded bank or a Sino-foreign joint-equity bank shall meet the following conditions when applying for the establishment
of a branch:
(1)
It has operated in China for more than 3 years, and it has made profits for 2 successive fiscal years prior to the application;
(2)
Its capital adequacy ratio is not less than 8%;
(3)
The applicant shall allocate the minimum amount of convertible currency equivalent to RMB 100 million yuan as the working capital
of each new branch to be established; the aggregate amount of the working capital allocated to all its branches within China, including
the to-be-established ones, may not exceed 60% of its registered capital; and
(4)
Other prudential requirements as specified by the CBRC.
Article 18
When a wholly foreign-funded bank or joint-equity bank applies for the establishment of a branch, it shall submit the following materials
(in triplicate) to the CBRC local office. After issuance of the preliminary examination opinions by the local office of the CBRC,
the application materials shall be directly sent to the CBRC for examination and approval with a copy sent to the CBRC local office
at a higher level.
(1)
Letter of application signed by the board chairman or the president (CEO, general manager) of the applicant, which shall include the
name of the to-be-established branch, the amount of working capital to be allocated, and intended business types, etc;
(2)
The resolution of the board of directors on approval of the establishment of the branch;
(3)
A feasibility study report;
(4)
A photocopy of business license;
(5)
The annual reports of the latest three years;
(6)
The articles of association of the applicant; and
(7)
Other materials as required by the CBRC.
Article 19
The letter of application for the establishment of a foreign-funded legal entity shall be signed by the chairmen or president (CEO,
general manager) of each investor and addressed to the Chairman of the CBRC. The letter of application for the establishment of a
branch of a foreign bank shall be signed by the Chairman or president (CEO, general manager) of the applicant and addressed to the
Chairman of the CBRC.
Article 20
For the establishment of a foreign-funded financial institution, the applicant shall submit to the CBRC the application materials
(in duplicate) as required in Articles 9 through 11 of the Regulation, and simultaneously submit a copy to the CBRC local office
of the place where the to-be-established institution will be located.
Article 21
The CBRC shall make a decision of acceptance or rejection within 6 months as of the date of receiving all application materials for
establishing a foreign-funded financial institution and shall inform the applicant of the decision in writing.
The applicant shall, within 15 days after receiving an acceptance notice, fetch a formal application form from the relevant CBRC local
office of the place where the to-be-established institution will be located, and start the preparatory work for the establishment.
During the preparatory period, the applicant shall form a preparatory team to take charge of the preparatory work and shall submit
the name list of team leaders to the relevant CBRC local office. When the preparatory work is finished, the preparatory team shall
be dissolved automatically. The preparatory period is 6 months.
Where the applicant fails to fetch the formal application form within the prescribed time limit, it may not apply again for establishing
an operational office in the same city within 1 year as of the date of receipt of the acceptance notice.
An applicant who receives a rejection notice may apply again for establishing an operational office when satisfying the requirements
of the establishment of a foreign-funded financial institution.
Article 22
The “principal person” as mentioned in Article 14 of the Regulation refers to the chairman or president of a foreign-funded legal
entity (CEO, general manager), or the president of a branch of a foreign bank (general manager).
Article 23
An applicant shall complete the following tasks within the preparatory period:
(1)
Establishing an internal control system, including an internal organizational structure, authorization and accreditation, management
of credit funds as well as the control policies and operational procedures for capital transaction, accounting and computer system.
The internal control system and operational procedures shall be sent to the relevant CBRC local office.
(2)
Staffing an appropriate number of business personnel that meet the needs of its business development and have received relevant training
on policies, regulations and professional knowledge, so as to meet the requirements for effective supervision and control of the
major business risks, examination, approval and reexamination of business at different levels, the division of work and balance of
the key posts;
(3)
Printing the main business vouchers and receipts used for external transactions and submitting samples thereof to the relevant CBRC
local office;
(4)
Equipping with the security facilities accredited by the relevant departments, the pertinent certifications of which shall be submitted
to the relevant CBRC local office;
(5)
Completing the audit on its internal control system, accounting system, and computer system by an accounting firm accredited by the
relevant CBRC local office before it opens business, and the audit report shall be submitted to the relevant CBRC local office.
Article 24
Where an applicant applies for the extension of the preparatory period, it shall submit an application to the relevant CBRC local
office not later than 1 month prior to the expiration of the preparatory period. The letter of application shall be signed by the
person in charge of the preparatory team of the to-be-established institution.
Where an applicant submits an application for the extension of the preparatory period beyond the prescribed time limit, the application
will be rejected the relevant CBRC local office.
The relevant CBRC local office shall, within 15 days after the date of receiving the application for extending the preparatory period,
decide on whether or not to approve such an extension. In the case of rejection, it shall give a written notice to the applicant
explaining the reasons for the rejection, and send a copy to the CBRC level by level.
Article 25
Upon the completion of the preparatory work, the applicant shall submit the letter of application signed by the person in charge of
the preparatory team, the application form filled out, as well as the documents as provided for in Article 14 of the Regulation,
to the CBRC local office of the place where the to-be-established institution will be located. After the issuance of preliminary
examination opinions by the CBRC local office, the application shall be directly submitted to the CBRC for examination and approval
with a copy sent to the CBRC local office at a higher level.
Article 26
The CBRC shall make a decision of approval or disapproval within 2 months as of the date of the complete application form and relevant
materials. The applicant shall, within 15 days as of the date of receipt of the notice from the CBRC, fetch the documents of whether
to approve the establishment of a foreign-funded financial institution. In the case of disapproval, it may apply again when satisfying
all the requirements for the establishment of a foreign-funded financial institution.
Article 27
If the application for establishing a foreign-funded institution is approved, the applicant shall apply for a prior opening inspection
to the relevant CBRC local office after obtaining the approval documents from the CBRC headquarters. The letter of application shall
be signed by the chairman or president of the board of directors (CEO, general manager) of the foreign-funded legal entity, or the
president or general manager of the branch of the foreign bank. After the applicant passes the inspection conducted by the relevant
CBRC local office, it shall fetch a financial business certificate from the CBRC. If it fails to pass the inspection, the foreign-funded
financial institution may apply to the competent office for a new inspection within 10 days as of the date of receiving the notice
of the inspection failure.
Article 28
Before a foreign-funded institution starts business, it shall make a public announcement of its opening of business on the national
newspapers as designated by the CBRC headquarters and the local newspapers as designated by the relevant CBRC local office, and shall
inform the relevant CBRC local office of the date of start of business in writing.
Article 29
The foreign-funded financial institution shall start business within 3 months after obtaining approval of its establishment granted
by the CBRC, except in the case when the relevant CBRC local office approves it to postpone the start of business under special circumstances.
Where a foreign-funded institution applies for postponing the start of business, it shall submit an application for the postponement
to the relevant CBRC local office within 2 months after the application for its establishment is approved by the CBRC. The letter
of application shall be signed by the chairman or president (CEO, general manager) of the foreign-funded legal entity, or the president
(general manager) of the branch of the foreign bank.
The relevant CBRC local office shall make a decision on whether or not to approve the postponement within 15 days after receiving
the application materials. If it makes a decision of disapproval, it shall notify the foreign-funded institution of the reasons for
disapproval in a written form and send a copy to the CBRC headquarters level by level.
Where a foreign-funded financial institution submit an application for postponing the start of business beyond the prescribed time
limit, the relevant CBRC local office shall reject its application for postponement.
The start of business may be postponed for no more than 3 months. If a foreign-funded institution fails to start business within the
time limit, the approval of establishment will become invalid automatically. The foreign-funded institution shall hand over the financial
business certificate to the CBRC. The applicant may not apply again for establishing an operational office in the same city within
1 year as of the day when the last establishment approval becomes invalid.
Article 30
Restructuring of a branch of a foreign bank into a foreign-funded legal entity shall in carried out in compliance with the principle
of legitimacy, prudence and continuous operation and vice versa.
Where a branch of a foreign bank intends to restructure into a foreign-funded legal entity, it shall apply to the relevant CBRC local
office in accordance with the requirements and procedures of the establishment of a foreign-funded legal entity. Where a foreign-funded
legal entity intends to restructure into a branch of a foreign bank, it shall apply to the relevant CBRC local office in accordance
with the requirements and procedures of the establishment of a branch of a foreign bank. The application shall be directly submitted
to the CBRC for examination and approval through the relevant CBRC local office and a copy to the CBRC local office at a higher level
at the same time. The application materials shall include a plan on the resolution of claims and liabilities during the restructuring
process.
Chapter III Business Scope
Article 31
Where a foreign-funded financial institution conducts, within the business scope as provided for by Article 17 or Article 18 of
the Regulation, foreign exchange businesses with overseas institutions, foreign-funded enterprises, permanent missions of foreign
countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, and foreigners and compatriots from Hong
Kong, Macao or Taiwan as well as some prescribed foreign exchange businesses with non-foreign-funded enterprises, it shall meet the
following applicable condition:
(1)
The working capital of the branch of a foreign bank shall not be less than the equivalent of RMB 100 million yuan in freely convertible
currencies;
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 300 million
yuan in freely convertible currencies;
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB
100 million yuan in freely convertible currencies;
(4)
The registered capital of a wholly foreign-funded finance company or joint-equity finance company shall not be less than the equivalent
of RMB 200 million yuan in freely convertible currencies.
Article 32
Where a foreign-funded financial institution conducts foreign exchange businesses within the scope as provided for in Article 17
or Article 18 of the Regulation with various kinds of clients, it shall meet the following applicable condition:
(1)
The working capital of a branch of a foreign bank shall not be less than the equivalent of RMB 200 million yuan in freely convertible
currencies
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 400 million
yuan in freely convertible currencies,
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB
100 million yuan convertible currencies;
(4)
The registered capital of a wholly foreign-funded finance company or joint-equity finance company shall not be less than the equivalent
of RMB 300 million yuan in freely convertible currencies.
Article 33
For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake
the businesses as specified in Article 17 or Article 18 of the Regulation, it shall meet the following applicable condition when
applying for conducting foreign exchange businesses with overseas institutions, foreign exchange businesses and RMB businesses with
overseas institutions, foreign-funded enterprises, permanent missions of foreign countries in China, representative offices of Hong
Kong, Macao or Taiwan in the Mainland, and foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some prescribed
foreign exchange businesses and RMB businesses with non-foreign-funded enterprises:
(1)
The working capital of a branch of a foreign bank shall not be less than RMB 200 million yuan, of which the capital in RMB shall not
be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 100 million yuan in freely
convertible currencies;
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 400 million yuan, of which
the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of
RMB 300 million yuan in freely convertible currencies;
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan,
of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent
of 100 million yuan in convertible currencies;
(4)
The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 300
million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less
than the equivalent of RMB 200 million yuan in freely convertible currencies.
Article 34
For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake
the businesses as specified in Article 17 or Article 18 of the Regulation, it shall meet the following applicable condition when
applying for conducting foreign exchange businesses with all kinds of clients, RMB businesses with foreign-funded enterprises, permanent
missions of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, foreigners and compatriots
from Hong Kong, Macao or Taiwan as well as some prescribed RMB businesses with non-foreign-funded enterprises:
(1)
The working capital of a branch of a foreign bank shall not be less than RMB 300 million yuan, of which the capital in RMB shall not
be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely
convertible currencies;
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 500 million yuan, of which
the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of
RMB 400 million yuan in freely convertible currencies;
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan,
of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent
of 100 million yuan in freely convertible currencies;
(4)
The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 400
million yuan, of which the capital in RMB shall not be less than 100 million yuan and that a in foreign currency shall not be less
than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 35
For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake
the foreign exchange businesses as specified in Article 17 or Article 18 of the Regulation with all kinds of clients, it shall
meet the following applicable condition when applying for conducting RMB businesses with foreign-funded enterprises, permanent missions
of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, foreigners and compatriots from
Hong Kong, Macao or Taiwan and non-foreign-funded enterprises:
(1)
The working capital of a branch of a foreign bank shall not be less than RMB 300 million yuan, of which the capital in RMB shall not
be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely
convertible currencies;
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 600 million yuan, of which
the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less than the equivalent of
RMB 400 million yuan in freely convertible currencies;
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan,
of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent
of 100 million yuan in freely convertible currencies;
(4)
The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 500
million yuan, of which the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less
than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 36
A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake the
businesses as specified in Article 17 or Article 18 of the Regulation shall meet the following applicable condition when applying
for conducting foreign exchange businesses and RMB businesses with all kinds of clients:
(1)
The working capital of a branch of a foreign bank shall not be less than RMB 500 million yuan, of which the capital in RMB shall
not be less than 300 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely
convertible currencies;
(2)
The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 1 billion yuan, of which
the capital in RMB shall not be less than 600 million yuan and that in a foreign currency shall not be less than the equivalent of
RMB 400 million yuan in freely convertible currencies;
(3)
The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 300 million yuan,
of which the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less than convertible
currencies equivalent of 100 million yuan in freely convertible currencies;
(4)
The registered capital of a solely foreign-funded finance company or joint-equity finance company shall not be less than RMB 700 million
yuan, of which the capital in RMB shall not be less than 400 million yuan and that in a foreign currency shall not be less than the
equivalent of RMB 300 million yuan in freely convertible currencies.
Article 37
The term “trade in government bonds, financial bonds, and other foreign exchange securities except stocks” as mentioned in Article
17 (4) and Article 18 (4) of the Regulation shall include, but not be limited to, the following foreign exchange investments such
as bonds of Chinese or foreign governm
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