Notice of the Shanghai Office of the China Banking Regulatory Commission on Further Optimizing Supervision over the Access of Banking Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone

• Document Number：No. 16 [2016] of the Shanghai Office of the China Banking Regulatory Commission
• Area of Law： Banking & Finance
• Level of Authority： Local Regulatory Documents
• Date issued：10-28-2016
• Effective Date：10-28-2016
• Status： Effective
• Issuing Authority： China Banking Regulatory Commission, Shanghai Bureau

Notice of the Shanghai Office of the China Banking Regulatory Commission on Further Optimizing Supervision over the Access of Banking Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone
(No. 16 [2016] of the Shanghai Office of the China Banking Regulatory Commission)
All banking financial institutions in Shanghai Municipality:
China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as “SHFTZ”) has been founded for three years. The continuously increase in the number of banking institutions within SHFTZ, the stable operations, and the active innovations have greatly promoted the trade and investment facilitation within SHFTZ. At the same time, with the building of SHFTZ, the international finance center, and the scientific and technological innovation center in both depth and breadth, the reform and development of the banking sector within SHFTZ are facing new situations. For the purpose of further adapting to new needs of economic transformation and development of Shanghai Municipality and the opening-up and exploration of the national financial reform, in accordance with the spirit of the Plan for Further Advancing the Pilot Program of the Opening-up of and Innovation on Finance in China (Shanghai) Pilot Free Trade Zone and Accelerating the Building of Shanghai International Financial Center (No. 339 [2015], CBRC) and the relevant work of the CBRC on the simplification of administrative procedures and the delegation of powers to lower levels, the Shanghai Office of the CBRC has revised the Detailed Implementation Rules for Simplifying the Access Modes of the Relevant Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone (for Trial Implementation) (hereinafter referred to as the “Detailed Rules,” see the Annex) issued in May 2014. By giving priority to the market access reform spirit of “simplification of administrative procedures, delegation of powers to lower levels, combination of decentralization and control, and optimization of services,” the scope of applicable regions and institutions of the access simplification policy within SHFTZ shall be further expanded, the access procedures for institutions and senior mangers within SHFTZ shall be optimized, the relevant reporting requirements shall be streamlined, the effective connection between access policies in and out of SHFTZ shall be improved, and the exploration of SHFTZ to the appropriate prospect and stewardship of the market access reform work shall be realized, so as to further exert more efforts to the trial reform and opening-up of the banking sector within SHFTZ, improve the service facilitation level of the banking sector and supervision within SHFTZ, and promote the financial environment construction of SHFTZ to reach a new stage.
All banking financial institutions shall conscientiously implement the Detailed Rules, constantly enhance their subject consciousness and capacities, effectively make a good use of the benefits of the policy for SHFTZ, and continuously improve the service level of the banking sector for real economy. You shall report any major problem encountered in the implementation thereof to the CBRC in a timely manner. For any institution that has improper implementation or has major potential risks and major violations of regulations, the CBRC may take regulatory measures including but not limited to cancellation of the access simplification policy depending on the actual circumstances, and implement the dynamic differentiated supervision.
Annex: Detailed Implementation Rules for Simplifying the Access Modes of Banking Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone (2016)
October 28, 2016
Annex:
Detailed Implementation Rules for Simplifying the Access Modes of Banking Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone (2016)
I. General Provisions
1. (Basis for formulation) These Detailed Implementation Rules are implemented on a trial basis in accordance with the Notice of the China Banking Regulatory Commission on Matters concerning Banking Regulation within China (Shanghai) Pilot Free Trade Zone and other relevant provisions on banking regulation and with the approval of the China Banking Regulatory Commission (“CBRC”).
2. (Overall objectives) The reform of the administrative approval system shall be deepened, the transformation of banking regulatory functions shall be accelerated, and innovations on regulatory patterns shall be proactively explored. According to the principle of national treatment before access and the requirements of internationalization and legalization, the interim and ex-post regulation capacities shall be improved in a comprehensive manner. In the meantime of simplification of administrative procedures and delegation of powers to lower levels, the management functions of the banking sector itself shall be further clarified and such original intention of the reform as formation of “producible and promotable” regulation experience shall be implemented.
3. (Scope of application) The Shanghai Office of the CBRC shall, in accordance with these Detailed Implementation Rules and the relevant provisions, simplify the access modes of the relevant institutions and senior managers within China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as “SHFTZ”), and supervise and administer the implementation of these Detailed Implementation Rules by the banking sector. If the Shanghai Office of the CBRC identifies that an institution within its jurisdiction or such institution has any major potential risks or any incident of major violations of regulations, it may suspend the policy of simplified access to SHFTZ such institution enjoys depending on the actual circumstances.
4. (Legal liability) For matters under the reporting system regulated by these Detailed Implementation Rules, banks shall take effective measures to ensure the authenticity, completeness, and accuracy of reporting materials and the compliance and eligibility of institutions and senior managers involved in the reporting. Where any concealment or omission in the reporting or any other non-compliant or imprudent act conducted by an institution in the process of handling of the matters reported has been identified, the regulatory department shall, in accordance with the Banking Supervision Law of the People's Republic of China and other relevant provisions, take compulsory regulatory measures or impose an administrative penalty on the reporting institution according to the law. In the meantime, it shall investigate the liabilities of the relevant persons in charge according to the law.
5. (Annual branch plan) The Shanghai Office of the CBRC shall not conduct ex ante approval of the annual branch plan for establishing new branches or upgrading branch offices of the national Chinese-funded commercial banks, policy banks, and local banks in Shanghai Municipality within SHFTZ. The establishment of new branches or upgrade of branch offices within SHFTZ shall not be restricted by the general branch plan of such banks in Shanghai region.
II. Simplifying Access Modes of Institutions within SHFTZ
6. (Institution type) A Chinese-funded commercial bank, a foreign-funded bank with legal person status, or a foreign bank branch within Shanghai Municipality which newly forms, modifies, or terminates branch offices (excluding branches) below the branch level within SHFTZ (including sub-branches, small local branches, and savings offices) is not required to report to the Shanghai Office of the CBRC for ex ante approval, and shall be subject to the ex post reporting system.
These Detailed Implementation Rules shall apply, mutatis mutandis, to the banking institutions formed within SHFTZ by banks in Hong Kong, Macao, or Taiwan region.
7. (Reporting circumstances) Ex post reporting circumstances as mentioned in this Chapter include new formation, modification, and termination. In particular, the modification thereof includes relocation, renaming, upgrade, and degrade.
8. (Reporting subjects) A superior governing bank which newly forms, modifies, or terminates any branch office shall, in accordance with the provisions of these Detailed Implementation Rules, be responsible for submitting reporting materials to the Shanghai Office of the CBRC.
9. (Reporting materials) A bank shall, according to the administrative licensing and reporting requirements for the new formation, modification, or termination of branch offices by Chinese-funded banks and foreign-funded banks, develop the internal management system for self-evaluation and acceptance, specify standards and requirements, clarify division of work and duties, and ensure each newly-formed or modified branch office's substantial compliance with the regulatory provisions and prudential requirements as well as the completeness and compliance of all formalities for termination of branch offices, and submit the following reporting materials to the Shanghai Office of the CBRC:
(1) A newly formed institution
(a) a formation report, including the operating capital that has been appropriated to the newly formed institution, the business address of the newly formed institution, and the names of primary persons in charge of the newly formed institution, among others;
(b) the approval document or board resolution of the head office or superior governing bank on its consent with the formation of the institution to be formed;
(c) a certificate on the availability of the operating capital;
(d) public security and fire prevention acceptance inspection certificates;
(e) a list of internal management systems;
(f) the self-evaluation and acceptance management system (which only needs to be submitted at the time of establishment and revision of the system, and is not required to be submitted repeatedly, here and below) and the certification materials on the banking institution's implementation of self-evaluation and acceptance. In particular, each evaluation result thereof shall be affixed with the seal of the relevant acceptance department and signed by the primary person in charge of the responsible department;
(g) a feasibility study report;
(h) an organization chart (specifying actually in-service persons); and
(i) relevant materials on senior managers of the newly formed institutions, as prescribed in Article 13 hereof.
(2) Relocation of an institution within SHFTZ
(a) a report on relocation within SHFTZ, including reasons for relocation and business address of the institution after relocation, among others;
(b) public security and fire prevention acceptance inspection certificates;
(c) the self-evaluation and acceptance management system and the certification materials on the banking institution's implementation of self-evaluation and acceptance. In particular, each evaluation result thereof shall be affixed with the seal of the relevant acceptance department and signed by the primary person in charge of the responsible department; and
(d) the original financial license and the photocopy thereof (A4 size).
(3) Renaming of an institution
(a) a renaming report, including the reasons for renaming and the result of name-checking in the Shanghai Administration for Industry and Commerce;
(b) the self-evaluation and acceptance management system and the certification materials on the banking institution's implementation of self-evaluation and acceptance (which are not required to be submitted in case of renaming of the institution not involving change of the business premise). In particular, each evaluation result thereof shall be affixed with the seal of the relevant acceptance department and signed by the primary person in charge of the responsible department; and
(c) the original financial license and the photocopy thereof (A4 size).
(4) Upgrade or degrade of an institution
(a) an upgrade or degrade report, including reasons for upgrade or degrade, among others;
(b) the institutional reform planning of the head office or the approval document of the superior governing bank on its consent with the upgrade or degrade;
(c) the authorization document of the superior governing bank on the business scope of the institution after the upgrade or degrade;
(d) an organization chart (specifying actually in-service persons) after the upgrade or degrade of the institution; and
(e) the photocopy of the original financial license (A4 size).
(5) Termination of an institution
(a) a termination report, including reasons for termination, among others;
(b) the approval document or board resolution of the head office or superior governing bank on its consent with the termination of the institution;
(c) the audit report of the internal audit department or external audit institution on the branch office to be terminated;
(d) plans for assets disposal, repayment of debts, and resettlement of employees of the terminated institution and the name list and contact information of persons in charge of the follow-up matters; and
(e) the original financial license and the photocopy thereof (A4 size).
10. (Certificate-issuing process) The Shanghai Office of the CBRC shall, within ten workdays upon receipt of the complete reporting materials submitted by a bank, undergo the formation, modification, or termination registration formalities in a financial institution as well as the market business access management system, and the financial license management system of the CBRC, and issue to, renew for, or withdraw from the financial institution the Financial License. The Shanghai Office of the CBRC shall only conduct a formality examination on the completeness of reporting materials, and simultaneously strengthen the interim and ex post supervision.
III. Simplifying Access Modes of Senior Managers within SHFTZ
11. (Senior manager type) The primary persons in charge of the institutions as listed in Article 6 hereof or the persons-in-charge that have actually performed the functions thereof are not required to be reported to the Shanghai Office of the CBRC for ex ante approval and are exempted from participating in office-holding qualification examination for senior mangers, and shall be subject to the ex post reporting system.
The aforesaid reporting system shall only apply to persons in charge of branch offices within the scope of qualification review of senior managers.
12. (Reporting subjects) The superior governing bank of a branch office within SHFTZ where a senior manager takes office shall, in accordance with the provisions of these Detailed Implementation Rules, be responsible for submitting reporting materials to the Shanghai Office of the CBRC.
13. (Reporting materials) A bank shall, according to the administrative licensing or reporting requirements for senior managers of foreign-funded banks and Chinese-funded banks, specify selection and appointment qualifications, clarify selection and appointment procedures and duties, and independently examine, verify, and confirm whether each senior manager of its branch office within SHFTZ substantially complies with all requirements of the regulatory provisions, and has the special governance capacity and practical experience required for effectively implementing its business development strategies within SHFTZ, and submit the following reporting materials to the Shanghai Office of the CBRC:
(a) a report on appointment of the proposed person, including the office to be held by the proposed person, the duties and powers, and the position and reporting route of such office in the organizational structures of the institution;
(b) a letter of authorization issued to the proposed person;
(c) the photocopies of the resume, identity certificate, and academic credentials of the proposed person (which shall be signed by the authorized signatory);
(d) a statement on the spotless record of the proposed person and a letter of commitment to abiding by laws and fulfilling his or her duties after holding office as signed by the proposed person;
(e) the outgoing audit report (economic responsibility audit report) or the performance evaluation report issued by his or her previous employer where the proposed person once served as the chairman of the board of a financial institution or a senior manager;
(f) an explanation on any office held or concurrently held by the proposed person in any bank or bank group or any affiliate thereof; and
(g) a letter of commitment for office-holding qualification review as signed and issued by the reporting institution and the relevant persons in charge thereof.
14. (Reporting procedures) A banks shall, within ten workdays after an internal appointment takes effect, submit complete reporting materials to the Shanghai Office of the CBRC. The Shanghai Office of the CBRC shall only conduct a formality examination on the completeness of reporting materials and simultaneously strengthen the interim and ex post supervision.
IV. Simplifying Access Modes of Relocated Institutions and Transferred Senior Managers in and out of SHFTZ
15. (Relocation of institutions to SHFTZ) Where any branch office below the branch level (excluding branches) of a bank modifies its business premise and no renaming of the institution is involved, the principle of one-way openness of SHFTZ featured by “Only-In-No-Out” shall be followed, that is, a branch office out of SHFTZ may, according to the requirements of Chapter II hereof, directly relocate to SHFTZ and be subject to the reporting system. Where a branch office within SHFTZ formed according to the reporting system is relocated out of SHFTZ, the relevant provisions of the CBRC shall apply.
16. (Transfer of senior managers) The qualification review of the incumbent senior manager in the banking sector in or out of SHFTZ that is transferred to a parallel or lower position of the same nature and type of a banking financial institution within SHFTZ shall be changed to be subject to the ex post reporting system.
The qualification review of the incumbent senior manager in the banking sector in or out of SHFTZ that is transferred to a parallel or lower position of the different nature and type of a banking financial institution within SHFTZ requires no qualification examination and it is only necessary to solicit opinions from the original qualification review department.
V. Supplementary Provisions
17. (Matters not covered) Matters not covered by these Detailed Implementation Rules shall be governed by the relevant provisions.
18 (Interpretation subject) These Detailed Implementation Rules shall be subject to interpretation by the Shanghai Office of the CBRC.
19. (Effective Date) These Detailed Implementation Rules shall come into force on the date of issuance. The Detailed Implementation Rules for Simplifying the Access Modes of the Relevant Institutions and Senior Managers within China (Shanghai) Pilot Free Trade Zone (for Trial Implementation) shall be repealed concurrently.