What’s new: The 342 local branches of China’s top financial regulatory body held inauguration ceremonies on Thursday to reveal their new names, as part of a sweeping overhaul of the country’s financial oversight system.
The local units of the now-defunct China Banking and Insurance Regulatory Commission (CBIRC) are renamed as subsidiaries of the newly formed National Financial Regulatory Administration (NFRA). The new administration was set up in May by absorbing the CBIRC and parts of the functions of the People's Bank of China and the China Securities Regulatory Commission.
The revamp affects 31 provincial branches, 5 municipal units and 306 city-level offices of the former CBIRC.
Most of the branches have maintained their previous leadership and personnel, Caixin learned.
A more detailed reform plan regarding the NFRA and subsidiaries’ institutional structure, responsibilities and personnel is expected to be revealed in late August, sources told Caixin.
Background: China unveiled a sweeping overhaul of its financial regulatory system in March, underscoring the government’s growing focus on maintaining financial stability and curbing risk.
As a key part of the overhaul announced in March, the creation of the NFRA indicates Beijing is shifting its financial regulatory system to a “twin peaks” model similar to those adopted by countries including the U.K. and Australia, analysts said.
The twin peaks model divides financial oversight between two specialist regulators — one responsible for maintaining the financial system's stability and prudential regulation of financial institutions, and the other responsible for oversight of market conduct and consumer protection, including the conduct of financial services firms.
While the PBOC will be responsible for macroprudential regulation, microprudential policymaking will be divided between the new regulator and the CSRC, analysts at Australia and New Zealand Banking Group Ltd. (ANZ) wrote in a research note.
The revamp “signals a shift in the government’s priority towards financial stability and de-risking the financial exposure of local governments and financial institutions,” they wrote.
Contact reporter Han Wei (weihan@caixin.com)
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