China News Service:
We know that the governance of small- and medium-sized banks and institutions is one of the key tasks of the supervision work. So, what are the specific measures being taken for this year's supervision? For those non-compliant shareholders, how is the work clearing their equities progressing?
Huang Hong:
Thank you for your question. I'll let Mr. Cao Yu take this one.
Cao Yu:
Thank you for interest in small- and medium-sized banks. The Central Committee of the CPC and the State Council have attached great importance to the supervision of small- and medium-sized banks and institutions. At the 2017 National Financial Work Conference, General Secretary Xi Jinping explicitly stated that we must improve the governing work of financial institutions' legal persons. In November 2019, the Financial Stability and Development Committee held its 9th conference and conducted a special study on deepening the reform of small- and medium-sized banks and resolving financial risk. The committee also emphasized the practice of sound corporate governance. Accordingly, the CBIRC cooperated with relevant departments to establish specific work plans and refine the governance requirements in detail.
Our current priorities for the governance of small- and medium-sized banks and institutions are: deeply integrating the Party's leadership and the governance of these banks and institutions, developing an evaluation system for their governance, and strengthening the "three boards and one management" system of supervision and accountability. The shareholders' structure must be optimized, the qualification of shareholders must be strictly checked, and their behavior must be regulated. A series of policies and regulations has been issued by the CBIRC, such as equity management measures, corporate governance supervision and evaluation measures. These documents have been laid as the regulation foundations for carrying out relevant works.
So far, initial progress has been achieved in the governance of small- and medium-sized banks and institutions. First, we have scaled up efforts to restrict irregularities and illegal equity-related actions, and constrain non-compliant shareholders. Last year, the CBIRC launched a campaign focused on regulating non-compliant shareholders and their affiliate transactions. Over 3,000 violations were found, and punishments were meted out. Over 1,400 non-compliant shareholders acting as natural persons or legal persons were cleared out. Since 2018, we have launched special investigations into small- and medium-sized banks and institutions within rural areas. So far, we have ordered non-compliant shareholders to transfer 3.3 billion equities, and we have punished 74 institutions to the value of 51.65 million yuan. Second, we have steadily conducted governance work to remove non-compliant shareholders and transfer their equities in high risk institutions. During the process of dissolving the risks in Baoshang Bank, the CBIRC prioritized governing non-compliant shareholders' equities and launching market oriented mergers and restructures. So far, progress has been made both in tackling risks for Baoshang Bank and in its reformations and reorganization work. For other institutions which have problems and have gained the attention of society, equity restructure plans have been enacted, and non-compliant shareholders have been removed and asked to withdraw their equities.
Although we have made some progress, we still face challenging tasks in enhancing the governance of small- and medium-sized banks and institutions. Next, the CBIRC will continue to act in accordance with market- and law-oriented policies to strengthen the regulation work and step up the centralized custody of equities. We will also further strictly check the qualifications of shareholders and reinforce pass-through management. Thank you.
