China proposes new rules on banking sector bankruptcy

CHINA’S banking institutions could apply to a court to be declared bankrupt under rule amendments proposed by China’s banking and insurance regulator on Friday (Nov 11).

The watchdog’s various proposals seek to reduce financial risk and support high-quality development of the banking industry, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement.

The draft amendments also spell out how regulators could conduct takeovers of troubled financial institutions to facilitate measures such as capital injection and equity restructuring.

Beijing has stepped up oversight of the sector in recent years after several high-profile scandals among smaller lenders such as Baoshang Bank, which was taken over by the government in 2019 and later declared bankrupt.

The proposed rule changes would provide specific guidance for how such actions should be conducted.

The draft rules also added that China’s banking institutions should not provide business-related documents, materials and data to overseas parties as part of China’s moves to tighten supervision on data security.

Overseas banking regulatory agencies should not conduct investigations domestically without authorisation, the draft rules add. REUTERS