China Banking Regulatory Commission Guidance on the Corporation Governance Reform and Supervision of Bank of China and China Construction Bank YinJianFa [2004] No.12 March 11th, 2004 Chapter I General Provisions Article 1 Joint-stock reform for state-owned commercial banks is a brand new reform practice in China’s financial sector with great significance. Article 2 The general goal of the joint-stock reform for the two pilot banks is to lay special stress on such central links as reforming the Article 3 Through reform, the two pilot banks shall reach and remain at above the medium-level of the world’s top one hundred big banks by corporate Chapter II Reform of Corporation Governance Article 4 The two pilot banks shall establish a standard shareholders’ general meeting, a standard board of directors, a standard supervisory The shareholders’ general meeting, board of directors, supervisory board and the system of senior management of the two pilot banks Article 5 The two pilot banks shall fairly and impartially choose strategic investors from home and abroad so as to change the unitary structure By introducing strategic investors especially foreign strategic investors, the two pilot banks shall not only enhance capital strength Article 6 The two pilot banks shall formulate clear and definite developing strategies so as to maximize value of the banks. The two pilot banks shall proceed from their own conditions and the market guidance, identify their core competitive advantages and Article 7 The two pilot banks shall establish scientific systems of decision making, internal control and risk management. The two pilot banks shall establish and improve risk management system covering credit risk, market risk and operational risk etc. Article 8 The two pilot banks shall, in accordance with the principle of intensive operating, exercise flatter organization and vertical business Article 9 The two pilot banks shall, according to the requirement of human resources management for modern financial enterprises, deepen the Article 10 The two pilot banks shall, in accordance with the standards and requirements for modern financial corporations and listed banks, exercise Article 11 The two pilot banks shall reinforce the construction of information and technology and improve comprehensive management and service Article 12 The two pilot banks shall implement the strategy of financial talents development, intensify targeted training programs and do well Article 13 The two pilot banks shall bring into full play the specialized advantages of intermediary organizations and steadily step up the process Chapter III Examination Indicators Article 14 The examination indicators of the joint-stock reform for the two pilot banks shall include the net return on assets (ROA), the net Article 15 The ROA of the two pilot banks shall reach 0.6% in 2005, and international good standard in the year 2007. Article 16 The ROE of the two pilot banks shall reach 11% in 2005, and further rise to over 13% in 2007 so as to ensure the effect of capital Article 17 The cost income ratio of the two pilot banks shall be controlled within the range of 35% to 45% as of 2005. Article 18 The two pilot banks shall divide the non-credit assets into five grades from 2004, examine the quality of all assets in accordance Article 19 The two pilot banks shall manage capital in strict accordance with relevant provisions in the Regulations on Capital Adequacy Ratio Article 20 The two pilot banks shall take effective measures to strictly control the centralized risk of the accreditation to the same borrower, Article 21 The provision coverage ratio of NPL shall reach 60% for the Bank of China and 80% for China Construction Bank at the end of 2005, Chapter IV Examination and Reporting System Article 22 The two pilot banks shall intensify efforts of bad assets disposal. The two pilot banks shall investigate into law and regulation violating cases and severely punish the personnel involved in such breaching Article 23 A strict accountability system shall be exercised by the two pilot banks in the reform with the responsibilities implemented in accordance The two pilot banks shall apply management by objective and make assessment of each stage’s work through strict examination and appraisal, Article 24 China Banking Regulatory Commission will examine and supervise the reform of corporate governance structure and various financial Chapter V Supplementary Provisions Article 25 Interpretation of this Guidance is subject to China Banking Regulatory Commission. Article 26 This Guidance shall come into effect as of March 11th, 2004. |
China Banking Regulatory Commission
2004-03-11