On December 31, the China Banking and Insurance Regulatory Commission announced that in 2019, the China Banking and Insurance Regulatory Commission issued and implemented the measures for the evaluation of corporate governance supervision of banking and insurance legal person institutions, initially establishing a comprehensive evaluation system for corporate governance supervision covering all commercial banks and insurance institutions, which will be implemented for two consecutive years in 2020 and 2021. The regulatory assessment results in 2021 show that the corporate governance of the banking and insurance industry has changed steadily for the better, but the problems in some areas still need to be paid attention to.
The evaluation results of corporate governance supervision show that the Bank Of China Limited(601988) insurance industry has earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, and the corporate governance reform has achieved preliminary results. However, there are still many problems in the field of corporate governance of banking and insurance institutions, and the task of improving the corporate governance of banking and insurance industry is still very arduous. Next, the cbcirc will urge the banking and insurance institutions to seriously rectify the problems found in the evaluation, truly promote reform and construction with evaluation, continuously consolidate the effectiveness of the evaluation, and promote the corporate governance construction of the Bank Of China Limited(601988) insurance industry to a new level.
corporate governance is steadily improving
From the overall situation, there were 1857 participating bancassurance institutions in 2021, with an average score of 73.93, an increase of 0.14 points over 2020. In 2021, there was no organization rated as class A (excellent). In 2020, one organization rated as class A was downgraded to class B due to inadequate rectification of some problems. 1466 institutions were rated as B (good) and C (qualified), accounting for 78.95%, an increase of 0.77 percentage points over 2020. The total proportion of institutions rated D (weak) and E (poor) has decreased, especially 138 institutions rated e, a decrease of 44 compared with 2020, accounting for 7.43%, a decrease of 2.73 percentage points compared with 2020.
Positive changes have taken place in key areas. Some progress has been made in the reform of key areas such as shareholder governance, related party transaction management and board governance.
Score rate of shareholder governance (score of this evaluation dimension / total score of this evaluation dimension) × 100%, the same below) is higher than that in 2020, especially the urban commercial banks and rural commercial banks are increased by 2.28 and 5.47 percentage points respectively. The number of institutions involved in the entrusted shareholding of commercial banks (referring to the number of institutions, the same below) is reduced by 23% compared with that in 2020, and the institutions involved in the pledge of high proportion of equity are reduced by 30%.
Compared with 2020, the scoring rate of related party transaction management increased significantly, with commercial banks and insurance institutions increasing by 10.44 and 8.93 percentage points respectively, of which national joint-stock commercial banks and rural commercial banks increased by 15.5 and 11.37 percentage points respectively, and insurance group companies and property insurance companies increased by 12.78 and 8.69 percentage points respectively. The number of institutions involved in the illegal credit granting of related parties by commercial banks decreased by 13%, and the number of institutions involved in the illegal approval of related transactions by insurance institutions decreased by 29%.
The scoring rate of board governance has improved, including 1.79 percentage points higher than that in 2020 for rural commercial banks, 4.17 and 2.78 percentage points higher for property insurance companies and life insurance companies respectively. The number of institutions involved in the expiration of the board of directors of insurance institutions decreased by 15%, and the number of institutions involved in the setting of independent directors that did not meet the regulatory requirements decreased by 15%.
explore good practices in corporate governance and achieve positive results
Actively innovate the effective path of the organic integration of the party’s leadership and corporate governance. Large state-owned commercial banks and insurance groups took the lead in writing the general requirements for Party building into the articles of Association; We will continue to improve the leadership system of “cross appointment and two-way entry”. The Secretary of the Party committee and the chairman of the board of directors are held by one person. The party president (General Manager) and the chairman of the board of supervisors generally concurrently serve as the Deputy Secretary of the Party committee. The party organization is fully embedded in the corporate governance structure; Establish and improve the list of rights and responsibilities for the Party committee to discuss and decide major operation and management matters, standardize and improve the requirements and procedures for the Party committee to study and discuss major operation and management matters, and ensure that the Party committee plays a leading role in guiding, managing the overall situation and promoting implementation.
Continue to explore ways and means to optimize corporate governance. Large state-owned commercial banks such as Industrial And Commercial Bank Of China Limited(601398) , China Construction Bank Corporation(601939) have continuously improved the structure of the board of directors. The size of the board of directors is about 11-15 people, with about 1 / 3 of executive directors, equity directors and independent directors respectively. There are female members on the board of directors. Independent directors are generally held by university professors, former heads of international organizations and former executives of large international financial institutions. The specialization of the board of directors The degree of internationalization and diversification has been continuously improved. China Merchants Bank Co.Ltd(600036) the board of directors paid attention to the stability and sustainability of the medium and long-term development strategy, insisted on vigorously developing the retail business and implementing digital transformation, actively promoted the senior management to perform their duties diligently within the scope authorized by the board of directors, and continuously improved the governance efficiency.
Continuously strengthen the guiding role of performance appraisal and salary management in operation and management. Bank Of Shanghai Co.Ltd(601229) the payment of more than 50% of the annual performance salary of senior managers shall be postponed for three years, the medium and long-term incentive income shall be cashed according to the incremental performance, and the performance salary of leaders causing heavy losses shall be subject to recourse deduction, which includes deferred performance, term incentive and paid annual performance salary.
Give full play to the supporting role of information technology in strengthening risk management. Banking and insurance institutions continue to increase investment in financial technology and continuously improve the informatization and intelligence level of risk management. The Pacific Securities Co.Ltd(601099) property insurance has built a risk management system suitable for the financial innovation and development strategy, independently developed the “risk radar” platform, and realized the online and intelligent management of disaster and loss prevention. Dongguan bank has established a connected transaction management system connected with the credit approval system, which realizes the whole process real-time monitoring of related party information screening, identification, credit declaration, line approval and other links.
Continuously enrich the beneficial practice of fulfilling the responsibility of environmental and social governance (ESG). Banking and insurance institutions actively responded to the covid-19 epidemic, implemented the requirements for fee reduction and profit transfer, guaranteed the efficient remittance of epidemic prevention funds at all levels, accurately supported enterprises to resume work and production, and supported small, medium-sized and micro enterprises to tide over difficulties. Large state-owned commercial banks have started the construction of environmental and social governance management system, actively increased relevant information disclosure, strengthened the development of green finance, and inclined more financial resources to the green field. Rural commercial banks provide sinking services, deeply cultivate the local areas, and help accurately eradicate poverty and revitalize rural areas. Insurance institutions actively participate in disaster rescue, disaster prevention and loss reduction in major disaster events such as epidemic situation, typhoon and rainstorm, and strongly support post disaster reconstruction.
some problems still need high attention
The cbcirc pointed out that some problems still need high attention.
The party’s leadership has been weakened. The party’s leadership role in some state-owned banking and insurance institutions is not in place, the relevant institutional arrangements are relatively general, the operability is not strong, and the Party committee’s pre research system on major operation and management matters is not in place.
Non compliance and imprudence of shareholders’ behavior. The share capital is untrue, the shareholders make false capital contributions, inject capital circularly and withdraw capital contributions, and the shareholders make capital contributions with entrusted funds, financial products issued and managed and other non self owned funds, which still exist in banking and insurance institutions to varying degrees. The investment shareholding is not in conformity with the regulations. Some shareholders illegally entrust to hold shares or hold shares on behalf of others. Some shareholders invest in several commercial banks, violating the regulatory provisions of “two participation and one control”. Some institutions have shareholders pledging shares in violation of regulations, and the equity pledge proportion of individual institutions is too high or changes too frequently. Shareholders interfere in the operation in violation of regulations. Some institutional major shareholders actually control the banking and insurance institutions by controlling the nomination and remuneration of directors and senior managers, manipulate the board of directors and senior management, interfere in the operation of the company in violation of regulations, and even wantonly encroach on the interests of the company.
There are defects in the management of related party transactions. The identification management is not in place, the identification of related parties is not comprehensive, the identification of related party transactions is not compliant, some directors, senior managers and shareholders fail to report the related party situation in accordance with the regulations, and the credit extension and fund utilization of related party transactions of some institutions exceed the proportion specified in the supervision. The review and supervision is not in place, the board of directors does not set up a connected transaction control committee, or the connected transaction control committee cannot effectively perform its duties of review and risk control, and the internal audit supervision on connected transactions is missing. There are illegal transfer of interests. A few institutions transfer interests through illegal related party transactions, illegally issue unsecured loans to related parties, illegally provide explicit or implicit guarantee for the financing behavior of related parties, and illegally invest in the projects and assets of related parties.
The effectiveness of the operation of the board of directors is insufficient. The structure of the board of directors does not meet the regulatory requirements, the proportion of directors nominated by the same shareholder and its related parties exceeds the regulatory requirements, the number of independent directors in the board of directors is insufficient, and the heads of special committees such as audit, related party transactions, nomination and remuneration are held by non independent directors. Directors lack independence and professionalism, and some equity directors lack professionalism. Independent directors are afraid, unwilling and unable to perform their duties independently. A few institutions have delegated the statutory powers of the board of directors to the chairman of the board of directors in violation of regulations, which has the tendency of “speaking in one voice”. The board of directors of individual institutions is in vain, and the decision-making supervision on major issues such as risk management and related party transactions is a mere formality. The development strategy is not prudent. Some institutions’ development strategies are extensive and radical, deviate from their main business, blindly pursue short-term performance, and form a large number of non-performing assets in the later stage.
(Securities Daily)
