China's Supervision of Bancassurance Institutions has Changed From Universal Regulatory to Regulatory of Individual Participants
On June 17, the CBIRC issued the "Measures for Supervising the Conduct of Major Shareholders of Banking and Insurance Institutions (for Trial Implementation)" (Draft for Comments). The publication of the Measures, together with the previous series of guidelines and evaluation methods, means that the supervision of bancassurance institutions has changed from universal regulatory of the industry to regulatory of individual participants, with more detailed and deeper regulatory requirements. The four main points include the following.
1. Prohibition of undue interference in the normal operation of banks. Restrictions are imposed on the behavior of shareholders, making it clear that major shareholders of bancassurance institutions should maintain the independent operation of bancassurance institutions and prohibit improper interference or restrictions on bancassurance institutions in violation of the law.
2. Improper promotion in the name of banks is not allowed. It is stipulated that bancassurance institutions shall adhere to independent and autonomous operation, establish an effective risk isolation mechanism, realize their respective independent accounting and risk bearing with major shareholders, and effectively prevent conflict of interest and risk contagion.
3. Voting rights will be restricted if the pledge of shares exceeds the amount. Clarify that there shall be no direct or indirect cross shareholding between the major shareholders of banks and insurance institutions and banks and insurance institutions.
4. Balance cash dividends and capital replenishment. It is mentioned that major shareholders of bancassurance institutions should support bancassurance institutions to adjust their profit distribution policies according to their own operating conditions, risk status, capital planning and market environment, and balance the relationship between cash dividends and capital replenishment.
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