CBRC Introduces Regulatory Fees For Financial
Institutions
The China Banking Regulatory Commission (CBRC), China's
top banking regulator started levying annual fees on banks
Monday which could slash the reported profits of the biggest
lenders already hard hit by loan write-offs. The policy
is aimed at making the CBRC financially independent in
the Chinese government budget, and instead relying on
fees paid by the institutions it regulates.
Chinese banks and companies have been hit hard by charges
of financial opacity, hurting their chances to go public
outside China.In
moving to a self-funding system, the CBRC will be following
an international trend that has seen many government regulatory
agencies charge the companies they regulate for the cost
of their operations. The move could also pave the way
for the agency to assert some independence from the central
government's control once it is no longer reliant on federal
policymakers for the money to cover its operations.
In
the past, some investigations of corruption and financial
impropriety have been halted because of government intervention.
This move would give CBRC the independence it needs to
enforce their own regulations.
To
cover its six billion yuan annual budget, the China Banking
Regulatory Commission (CBRC) will charge fees based on
a bank's assets and on its paid-in capital. Both domestic
and foreign-owned lenders will be covered.The charges
will include a fee of 0.08 per cent of a bank's registered
capital and a separate charge of 0.02 per cent of a bank's
total assets.Under the regime, mainland domestic banks
alone, including state-owned, joint-stock and city commercial
banks, will pay 5.6 billion yuan, equivalent to between
5 per cent and 10 per cent of their annual net profits.
The
Big Four state-owned commercial banks - Bank of China,
Industrial and Commercial Bank of China, Agricultural
Bank of China, and China Construction Bank - will be hard
hit by the fees because of their huge assets and registered
capital. A banking source said larger banks will be hit
harder by the new fees because their reported profits
have already been slashed by the huge provisions against
loan losses they have made under pressure from the central
government. Several of the banks also plan to sell shares
to foreign investors next year and are cleaning up their
balance sheets in preparation for a sale. With assets
of 5 trillion yuan and registered capital of 186.39 billion
yuan, Bank of China (BOC) could pay as much as 1.149 billion
yuan.
Last
year, BOC - the country's largest foreign exchange bank
- made a net profit of 2.45 billion yuan. If the fees
had been in place then, they would have totalled 46 per
cent of its profit.
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