According to media reports, China may soon establish an independent deposit insurance agency.
During the two sessions this year, high-level regulatory agencies frequently “blowing” high-risk financial institutions. As Guo Shuqing, chairman of the China Insurance Regulatory Commission, said recently, financial institutions must not only die, but must be eliminated. According to him, at present, the Banking Regulatory Commission is studying the issue of high-risk financial institutions withdrawing from the market. If the standards are met, high-risk financial institutions can withdraw from the market.
From the high-level statement, the exit of high-risk financial institutions is not only an important issue being studied by the Banking Regulatory Commission, but the central bank is also highly concerned. Financial institutions are different from ordinary enterprises, and the financial product services they provide are characterized by particularity, complexity and publicity. It is difficult for a financial regulatory department to promote high-risk finance with wide coverage and high sensitivity. Agency disposal. It is imperative to promote the normal “metabolism” of financial institutions by forming synergies between financial supervision and clearly defining their respective responsibilities, and formulating a set of laws and regulations for handling high-risk financial institutions with strong operability and clear rules.
In terms of system first, China introduced the “Regulations on Deposit Insurance” in 2015. The deposit insurance system has been implemented for three years, although it has played a role in protecting depositors’ rights, maintaining financial markets and public confidence in China’s banking system. However, the risk management function of deposit insurance has not been fully utilized. As an important regulation of the risk management of China's banking financial institutions, the "Regulations" in the handling of trigger mechanisms, disposal power, disposal methods, disposal tools,fundThe use and backup financing still need to be further improved. This is also why during the two sessions this year, representatives of several central bank systems have suggested that the main reasons for the revision of the Regulations should be revised as soon as possible. From a longer-term perspective, the institutional framework for the disposal of high-risk financial institutions, especially banking financial institutions in China. To improve, it is necessary to improve the level of legislation and legal effectiveness. The "Regulations" should further develop the "Deposit Insurance Law" on the basis of perfection, and even the formulation of the "Financial Institutional Bankruptcy Law" needs to be put on the agenda.
Disposal of the problem organization
Low degree of specialization in marketization
Undoubtedly, the disposal of high-risk financial institutions must adhere to the principles of marketization and rule of law. Especially in terms of the rule of law, China has long had relevant laws and regulations for the disposal of high-risk financial institutions. Many representatives of the central bank system have said that with the official implementation of the Deposit Insurance Regulations in May 2015, China’s banking industry The legal framework for the marketization of financial institutions has basically been formed. The regulations on the risk disposal of laws and regulations such as the "Commercial Banking Law" and "Banking Supervision and Management Law" are in an orderly connection. On the whole, the legal framework for the market-based exit of China's banking financial institutions is mainly composed of the Regulations and the Enterprise Bankruptcy Law.
However, although the legal framework for the disposal of high-risk financial institutions, especially banking financial institutions, has basically taken shape, there are still many unsatisfactory things in practice. Bai Hexiang, deputy of the National People's Congress and the president of the Central Bank of Guangzhou Branch, said that on the one hand, there is a lack of clear and orderly disposal mechanism at the legal level. At present, the risk disposal of financial institutions in China has obvious fragmentation characteristics in legislation, which is outstanding in the formation of a Complete set of disposal rules, lack of clear division of responsibilities for risk management, and no effective risk handling triggering standards. On the other hand, at present, the existing domestic practice problems of problem-solving institutions are mainly concentrated in the local methods of human financial institutions. The disposal methods generally adopt the case-by-case approach of “one case, one discussion”, and the degree of marketization and specialization is low.
“The government-led disposal model usually focuses on maintaining stability and protecting local related enterprises and institutions. The willingness to actively expose problems is not strong, and it is even more reluctant to take proactive measures in a timely manner. The regulatory authorities are considered to be dereliction of duty due to fears that financial institutions will fail. After the risk occurs, it may also be desirable to delay the disposal time. Eventually, the disposal process will be delayed for a long time, and the problem organization cannot withdraw from the market in time. For example, Hainan Development Bank has been in liquidation since its administrative closure in 1998. Bai Hexiang said.
Wang Yuling, deputy of the National People's Congress and the president of the Wuhan Branch of the Central Bank, also said that in the practice of risk disposal of local banking financial institutions, it is more common for local governments to take the lead in adopting the “one case and one discussion” approach and the management of the problem organization.shareholderThe creditors and investors negotiated and negotiated a final disposal plan. Under certain historical conditions, this approach helps to stabilize the situation quickly and maintain the credit of the financial system. However, the drawbacks of this approach are also very obvious, such as not conducive to timely containment of panic and risk contagion, no statutory loss-sharing mechanism, inefficiency, lack of equity, etc. For example, if a city credit cooperative in Hubei has been revoked for 18 years, due to excessive interest involved, it has not been liquidated.
Therefore, on the basis of the legal framework for the marketization of existing banking financial institutions, we will gradually get rid of the “one case, one discussion” case negotiation model, form a clear and complete set of disposal rules and standards, and improve the marketization and specialization of disposal. The degree is especially important. The improvement of the "Regulations" as soon as possible has become the unanimous recommendation of many central bank system representatives.
Deposit insurance institutions need more empowerment
Strengthen early correction
Since the implementation of the "Regulations" for three years, the official has not announced the size of the deposit insurance fund. However, a central bank insider disclosed to the Securities Times reporter that the current fund size is as high as tens of billions of yuan, but so far has not used the rescued institutions, "hundreds If the deposit insurance fund of 100 million yuan is really used to rescue banks on the verge of bankruptcy, it is also a drop in the bucket. Therefore, the use of deposit insurance funds should be the last resort. The disposal of high-risk financial institutions should try not to go bankrupt, but consider moreReorganizationOther measures such as mergers."
Wang Jingwu, deputy of the National People's Congress and director of the Financial Stability Bureau of the Central Bank, also told the Securities Times reporter that in the actual disposal process, specific analysis should be carried out on specific issues based on basic principles, tailored to local conditions, and flexible in adopting various methods for different high-risk institutions. In addition to market exits, there are mergers and acquisitions, online repairs, and so on. As far as China's current situation is concerned, the use of online repair, mergers and acquisitions is more conducive to stability.
Since the use of deposit insurance funds should be the final "big move" in the process of disposing of high-risk financial institutions, what is the main purpose of amending the "Regulations" or even the "Deposit Insurance Law"? Many representatives of the central bank system believe that the early correction and risk management functions of the deposit insurance fund management institutions should be strengthened so that they can identify problem financial institutions and their risk points as early as possible in the framework of “early identification and timely intervention”. Develop and initiate interventions and procedures as soon as possible to reduce the likelihood of financial institutions eventually closing down and the cost of risk disposal.
It is worth noting that the strengthening of early correction and risk management functions is inseparable from the empowerment of deposit insurance fund management institutions, the clarification of the risk handling initiation criteria, and the clear division of responsibilities of various responsible entities in the risk disposal process.
Specifically, in terms of empowerment, deposit insurance funds are now managed by the Central Bank Financial Stability Board. Many people suggest that the next step should be to set up a separate fund management team to realize the materialization of deposit insurance institutions and give them on this basis. The deposit insurance agency has the corresponding power of early correction and risk disposal.
Jin Penghui, member of the National Committee of the Chinese People's Political Consultative Conference and the president of the Shanghai Branch of the Central Bank, said that the next step should be to give the deposit insurance institutions more full and direct access to information, on-site verification and proposed punishment, to ensure that the deposit insurance institutions are fully and continuously obtained safe and stable operation of the insurance institutions. Internal control and regulatory information, identify problems and risks in a timely manner, and take risk control and corrective actions in a timely manner.
Wang Yuling also suggested that an independent deposit insurance fund management agency should be set up to clarify its duties of implementing professional disposition and to give it the necessary personnel management, financial use, work decision and execution rights.
In addition, in strengthening the early correction function, in addition to giving the deposit insurance institutions more information access rights and on-site verification rights, it is also inseparable from the further enrichment of early corrective measures. At present, the "Regulations" only propose early corrective measures that can be implemented in four aspects, including problem insurance institutions should take timely capital supplements, control asset growth, control major transaction credits, and reduce leverage.
Wang Jingwu suggested that in the future, it may be considered to increase “restricted distribution of dividends or incentives, restrictions on equity investment orRepoMeasures such as capital instruments, restrictions on capital expenditures, suspension of high-risk assets, restrictions on the creation of new institutions or the opening of new businesses, etc., to avoid problems with the shareholders of the insurance institutions “eat the equity” by distributing dividends or implementing incentives to “eat deposits” to correct them at an early stage. During the period, we will save ourselves in time.
Clear risk disposal
Startup criteria and disposal process
Defining the starting criteria for risk disposal, that is, clarifying the triggering indicators for the deposit insurance institutions to initiate the disposition procedures for problem insurance institutions, which involves the definition of standards for high-risk financial institutions. The Securities Times reporter learned that in December 2017, the central bank officially launched the rating of central bank financial institutions. The rating indicator system focuses on macro-prudential management requirements such as capital management, asset quality, liquidity, relevance, cross-border business and robustness. The result is an important basis for determining the differential rate of deposit insurance risk; in the first quarter of 2018, the central bank completed the first central bank financial institution rating for over 4,000 financial institutions, of which high-risk financial institutions with rating results from 8 to 10 420 homes.
Then, can the standard of central bank financial institution rating be the starting standard for risk management of deposit insurance institutions? The above-mentioned central bank insiders believe that the central bank financial institution rating method is more based on quantitative analysis based on off-site verification, which is mainly based on financial institutions.Financial StatementsThe real situation of financial institutions is difficult to fully grasp. This is also the reason why the deposit insurance institutions should be given sufficient information access and verification rights. It is necessary to fully understand the financial institutions whether they are at high risk through the full understanding of “qualitative + quantitative”.
Wang Jingwu also believes that the identification of high-risk financial institutions requires a comprehensive assessment based on quantitative and qualitative analysis. Quantitative analysis objectively assesses the operating level and risk status of financial institutions in terms of capital status, asset quality, expected loss tolerance, profitability, operational efficiency and scale of operations. Qualitative analysis is evaluated from the perspectives of corporate governance, internal control, asset management, capital and its management, liquidity risk, market risk, profitability, information systems and local financial ecology. At the same time, it is necessary to fully refer to the "live situation" found in off-site supervision, stress testing, and on-site inspection, and comprehensively analyze and judge.
Once the problem agency triggers the critical point of the deposit insurance agency's risk disposal, the deposit insurance agency's disposal process needs to be further clarified. In combination with the recommendations of many deputies, the disposal process for high-risk financial institutions should first require them to implement self-rescue within the time limit, which is the early corrective measures mentioned above; once the self-rescue is not successful, the takeover process should be initiated in time. The deposit insurance agency takes over the disposal and comprehensively adopts various measures to implement specialized and market-oriented disposal of the problem bank. If the problem organization still has no possibility of saving after taking the risk disposal measures, it should enter the judicial bankruptcy liquidation and deposit insurance. The institution acts as the bankruptcy administrator and, after fulfilling the obligation to pay the deposits in accordance with the law, participates in the bankruptcy proceedings as a creditor, distributes the bankruptcy property of the bank, and preferentially compensates for the personal creditor's repayment, minimizing the loss of the deposit insurance fund.
Among them, what kind of disposal measures can be taken after the deposit insurance institution acts as the takeover organization of high-risk financial institutions? Jin Penghui suggested that the "Regulations" should be linked with the existing laws such as the "Commercial Banking Law" to clarify the takeover responsibility of deposit insurance institutions. Improve risk disposal methods, including takeover, compulsory transfer of assets and liabilities, debt write-down or conversion of debt into equity, establishment of asset management entity to dispose of non-performing assets, establishment of bridge institutions, organization of acquisition and acceptance, restriction of shareholders' rights, replacementExecutiveAnd directors, mandatory shareholders and unsecured creditors bear losses, adjustments and terminationscontract, fast payment to depositors, etc.
Financial Institutions Bankruptcy Law
Formulation should be put on the agenda
"In terms of overall thinking, improving the deposit insurance system can be divided into 'two steps'." Jin Penghui said that in the near future, the focus is on improving the implementation rules of the deposit insurance system under the existing legal framework, and clarifying the deposit insurance institutions as the main body of risk disposal. Clearly define the responsibilities of each department and rationalize the risk management mechanism of financial institutions. In the long run, on the basis of the "Regulations", the "Deposit Insurance Law" will be formulated and the effective proven system will be raised to the legal level, and the functional orientation of the deposit insurance system in the prevention of systemic financial risks and public assistance mechanisms will be fully demonstrated. Market-based risk monitoring and risk management functions.
It is worth noting that in addition to improving the "Regulations" and even studying the deposit insurance law, the "Financial Institutions Bankruptcy Law" may also be urgently put on the agenda. In the bill jointly submitted by Bai Hexiang and other representatives of the National People's Congress this year, it is proposed to formulate the Financial Institutions Bankruptcy Law as soon as possible.
Bai Hexiang believes that allowing financial institutions to orderly and bankruptly is an inevitable requirement of the market economy. Although the newly revised Enterprise Bankruptcy Law clarifies the bankruptcy of financial institutions, specific issues such as standards of bankruptcy, bankruptcy administrators, and bankruptcy settlement procedures are not refined and clarified, lacking feasibility, operability, and Systematic.
In the view of Bai Hexiang, the conditions for formulating the "Financial Institutional Bankruptcy Law" have matured. On the one hand, the market foundation and public opinion atmosphere have been formed, the public has a new understanding of the bankruptcy of financial institutions, and the financial regulatory level has also reached a consensus on improving the bankruptcy legal system of financial institutions. On the other hand, the legal basis for the formulation of the Financial Institutions Bankruptcy Law is already in place. China's deposit insurance legal system has been established. It has accumulated a certain legal basis for the bankruptcy of financial institutions. Some important normative documents also involve the bankruptcy of financial institutions.
At the same time, there are mature financial institutions in the international financial bankruptcy legislation experience can be used for reference, such as Russia has a legal rules specific to the bankruptcy of financial institutions, supplemented by the corresponding general bankruptcy law; represented by the United States, Canada, financial institutions Bankruptcy does not apply to the general bankruptcy law. In the Federal Deposit Insurance Law and its amendments, it fully considers the particularities of financial institutions such as banks and the differences in the bankruptcy rules of financial institutions, so that the regulatory authorities can take all powers to the bankrupt banks and eliminate them. Court intervention.
"The public opinion can't talk about the "Financial Institutional Bankruptcy Law", the legal system should go ahead and reflect the advanced nature." Bai Hexiang told the Securities Times reporter.
In addition, in the legislative model, Bai Hexiang also put forward more feasible suggestions. He believes that the State Council may first enact the "Financial Institutions Bankruptcy Regulations", and then sum up the experience to accelerate the promotion of the National People's Congress to formulate the "Financial Institutions Bankruptcy Law", which should be the less expensive and optimal path of choice. In the financial institution's bankruptcy procedures, matters involving professional and technical matters are decided by the regulatory authorities, and matters involving the confirmation, modification and termination of property or property rights of the bankrupt financial institutions are decided by the court. Such a model is fast and flexible. Authority and compliance with the provisions of the judicial process will help improve the efficiency of bankruptcy disposal of financial institutions.
(Article source: China Daily)