On April 6, the central bank issued the financial stability law of the people’s Republic of China (Draft for comments) and solicited opinions from the public.
The introduction of the financial stability law will help solve the problems of the current legal system related to financial stability, such as the lack of overall design and cross industry and cross sectoral overall arrangement, scattered relevant provisions and overly principled provisions, and provide a clear legal basis for preventing and resolving financial risks and establishing a long-term mechanism to maintain financial stability.
Improve the working mechanism and consolidate the responsibilities of all parties for financial risk prevention, resolution and disposal. The financial stability law stipulates that the financial commission of the State Council shall coordinate financial stability, reform and development; Relevant departments and localities shall, in accordance with the division of responsibilities and the requirements of the financial commission, perform the duties of financial risk prevention, resolution and disposal according to law; Deposit insurance fund management institutions and industry guarantee fund management institutions play the role of a market-oriented and legalized disposal platform. At the same time, the bill clearly further compacts the main responsibilities of financial institutions and their major shareholders and actual controllers, the territorial responsibilities of local governments and the regulatory responsibilities of financial regulatory departments. The improvement of working mechanism and the compaction of responsibilities will help to exert joint efforts and improve the efficiency of financial stability.
Establish a financial stability guarantee fund to enhance the ability to deal with major financial risks. As a reserve fund for the disposal of major financial risks, the financial stability guarantee fund is composed of funds raised from financial institutions, financial infrastructure and other entities and other funds specified by the State Council. It is under the overall management of the financial commission of the State Council for the disposal of major financial risks with systematic impact, When necessary, the people’s Bank of China can provide liquidity support for the fund with re loans and other public funds. The financial stability guarantee fund, together with the existing deposit insurance fund and industry guarantee fund, operates and cooperates at both levels to further strengthen China’s financial safety net.
Establish a market-oriented and legalized disposal mechanism, improve the disposal tools, optimize the use of funds, add new disposal tools such as overall transfer of assets and liabilities, establishment of bridge banks and special purpose vehicles, suspension and termination of net settlement in the financial stability law, enrich the disposal means, and clarify that the institutions under resolution can implement equity, debt write down and debt to equity swap according to the principle of market-oriented and legalization, and share the disposal costs, Protect the legitimate rights and interests of shareholders, creditors and relevant stakeholders. At the same time, the financial stability law adheres to the principle of self rescue before external rescue in dealing with risks, and adopts the principle of actively self rescue insurance (such as capital supplement by shareholders and actual controllers) – marketization A number of measures, such as legalized disposal (market-oriented M & A, deposit insurance fund and industry guarantee fund) – local public resources (endangering regional stability and difficult to resolve by market-oriented means) – financial stability guarantee fund (major financial risks endanger financial stability), can reduce the dependence on public funds, ensure the matching of rights, responsibilities and interests and reduce moral hazard.
The introduction of the financial stability law is consistent with the relevant deployment of risk prevention and control in the government work report of the two sessions, which helps to stabilize market expectations, prevent external shocks, and firmly adhere to the bottom line of no systemic financial risks. It is of positive significance to stabilize the overall business environment of the banking industry. At the current stage, the policy orientation of steady growth remains unchanged and the favorable and broad credit pattern continues. We continue to be optimistic about the restoration of the banking industry, pay attention to the low allocation value of the valuation of the banking sector and individual stocks, and follow two main lines: (1) high quality urban commercial banks and rural commercial banks with significant location advantages, strong momentum of expansion and asset quality maintaining the leading level in the industry are recommended Bank Of Ningbo Co.Ltd(002142) ( Bank Of Ningbo Co.Ltd(002142) ) and Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) ( Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) ); (2) For high-quality wealth management firms that have benefited from the medium and long-term track of wealth management and achieved remarkable transformation results, China Merchants Bank Co.Ltd(600036) ( China Merchants Bank Co.Ltd(600036) ) and Ping An Bank Co.Ltd(000001) ( Ping An Bank Co.Ltd(000001) ) are recommended.
The risk indicates that the macroeconomic growth is lower than expected, resulting in the risk of deterioration of asset quality.
