The reporter of Shanghai Securities News learned on the 14th that the China Banking and Insurance Regulatory Commission recently issued the notice on carrying out special inspection on related party transactions in the use of insurance funds, and decided to organize relevant China Banking and insurance regulatory bureaus to carry out special inspection on related party transactions in the use of insurance funds nationwide in 2022.
the special inspection focuses on four aspects
The CBRC said that the special inspection was carried out nationwide by means of up-down linkage, aiming to continuously release the momentum of reform, strive to consolidate the foundation of on-site inspection of non banking institutions, find out the outstanding problems, reveal potential risks, seriously investigate and deal with violations of laws and regulations, transmit regulatory pressure to market subjects, and form a high-pressure situation against violations of laws and regulations, We will resolutely curb the spread of improper use of insurance funds in related party transactions. The on-site inspection is organized and implemented by the Inspection Bureau of non banking institutions of the CBRC.
The notice made it clear that this special inspection focuses on financial holding or invisible financial holding platforms with capital operation as the main business, as well as small and medium-sized insurance institutions with diversified development and radical expansion of industrial capital as shareholders.
The key contents of this special inspection include related party transaction system and mechanism, related party transaction information disclosure, related party transaction review, fund utilization related party transaction behavior .
The CIRC said that in recent years, the CIRC has attached great importance to the supervision of related party transactions of banking and insurance institutions. In the risk disposal of high-risk institutions, it has found that there are great potential risks in the use of related party transactions of insurance funds, the patterns of improper related party transactions have been constantly renovated, and the concealment has been increasing, Some shareholders and actual controllers of the company cover up the essence of related party transactions in various ways to avoid internal review, external supervision and information disclosure of related party transactions.
The reporter learned that, as the first special inspection on related party transactions in the use of insurance funds since the establishment of the CBRC, this on-site inspection is also the first large-scale special inspection action after the reform of the main responsibilities of insurance institutions, which fully shows that the CBRC implements the spirit of the central economic work conference and strengthens the effective supervision of capital, Strengthen the construction of the contingent of financial supervision cadres and make a good determination to prevent major financial risks.
The notice stressed that all relevant bancassurance bureaus should, according to the risk characteristics of the inspected objects, make an overall allocation of regulatory resources, select and transfer backbone forces and establish on-site inspection teams; We should strengthen the punishment. For illegal related party transactions with bad nature, serious circumstances and repeated investigation and repeated violations, we should severely punish them in accordance with relevant laws and regulations, and seriously investigate the responsibilities of relevant personnel. If a crime is constituted, they shall be transferred to judicial organs for criminal responsibility in accordance with the law.
The notice requires that the construction of on-site inspection team should be continuously strengthened to improve the on-site inspection ability of bank insurance supervision cadres in the use of insurance funds; We should attach great importance to scientific and technological empowerment, make full use of banking and insurance related financial infrastructure resources, make full use of relevant data information and scientific and technological means, and constantly improve the inspection efficiency; While using the routine inspection methods, the related parties and funds penetration inspection shall be carried out through the whole process of insurance fund utilization to ensure in-depth investigation.
the measures for the administration of connected transactions of banking and insurance institutions will come into force on March 1
On the 14th, the reporter also learned that the China Banking and Insurance Regulatory Commission drafted the measures for the administration of related party transactions of banking and insurance institutions (hereinafter referred to as the “measures”), further strengthened the supervision of related party transactions, standardized the related party transactions of banking and insurance institutions, and prevented the risk of interest transmission. The measures will come into force on March 1, 2022. The CBRC will issue an implementation notice in the near future to clarify the arrangements for the transition period.
The person in charge of relevant departments of the CBRC said that the measures comply with the needs of industry development, pay attention to learning from the institutional experience of foreign countries, and cover all kinds of banking and insurance institutions supervised by the CBRC.
The measures absorb and integrate the institutional advantages of the banking and insurance industries, unify the management rules of related party transactions, take into account the characteristics of different types of institutions, and strive to achieve differentiated supervision based on the consistency of regulatory standards. In general, banking and insurance institutions should maintain the company’s operational independence, improve market competitiveness, control the number and scale of related party transactions, focus on preventing the risk of interest transmission to shareholders and their related parties, and avoid complex arrangements such as multi-layer nesting.
According to the person in charge, the differentiated supervision of the measures is mainly reflected in three aspects:
First, implement supervision according to the degree of institutional risk. The regulatory authorities can set or adjust the supervision proportion of related party transactions applicable to bancassurance institutions according to the corporate governance status, risk status of related party transactions and institutional type characteristics of Bancassurance institutions, so as to enhance the pertinence and effectiveness of supervision on the premise of preventing risks.
Second, strengthen supervision in key areas. The measures set proportional limits for bank credit, insurance fund utilization, trust fund investment and other high-risk related party transactions related to funds, lowered the upper limit of the proportion of insurance fund utilization, and some indicators decreased by 40%, focused on preventing the chaos of financing to major shareholders.
Third, strengthen the management of off balance sheet business and asset management business. Investment in specific purpose vehicles of banking institutions and other businesses that are essentially subject to credit risk by banking institutions shall be included in the credit supervision proportion to be standardized, so as to prevent circumvention of supervision through the design of complex transaction structure.
For violations such as interest transfer to related parties and avoidance of supervision through complex transaction structure or channel business, the measures set prohibitive provisions, requiring institutions to optimize the identification of related parties and related transactions and strengthen the management of related transactions in key areas such as off balance sheet, asset management and interbank in accordance with the principle of substance over form and penetrating supervision.
The above person in charge said that in the identification of related parties, the method adopts the combination of direct identification and substance over form identification to reasonably define the scope of related parties and identify related parties at all levels. Learn from the common practices outside China and according to the importance and risk, method adopts the direct identification method for key related parties. The main shareholders penetrate upward to the controlling shareholders and actual controllers, and downward to the legal persons under their control, focusing on preventing the risk of transferring interests to shareholders.
at the same time, the measures include subsidiaries into related parties to prevent the risk of benefit transmission through subsidiaries; commercial banks with related relationships will also be included in related parties to prevent the risk of major shareholders obtaining bank funds by implicitly holding shares in multiple banks.
In terms of clarifying the management responsibilities, the measures compacted the main responsibilities of institutions in the management of related party transactions, established an accountability mechanism at all levels, strengthened the functions of related party transaction control committee, established a cross departmental related party transaction management office at the management level, defined the leading department and set up special posts, and implemented the identification of related parties and the daily management of related party transactions.
In addition, regulatory measures have been further enriched. The Measures specify that bancassurance institutions whose corporate governance supervision evaluation results are grade e shall not carry out credit granting, fund utilization and fund-based related party transactions; For violators, measures such as industry notification and ordering institutions to be held accountable may be taken. The measures also specify the handling measures for the violations of institutions, directors, supervisors and senior managers.
The CBRC said that the promulgation and implementation of the measures is an important measure for the CBRC to further improve the management of related party transactions in the banking and insurance industry. It is of great significance to strengthen the management of related party transactions of banking and insurance institutions, promote the rectification of related party transactions and prevent the risk of interest transmission.
Next, the CBRC will guide and urge all banking and insurance institutions to earnestly implement the measures, continuously improve the management level of Bank Of China Limited(601988) insurance institutions’ connected transactions, strive to build a corporate governance mechanism of banking and insurance industry with Chinese characteristics, and promote the high-quality development of banking and insurance institutions.
