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Pilot firms for new financial holding rules include heavy-hitters

By Zhu Lingqing | chinadaily.com.cn | Updated: 2018-05-23 14:11
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A mascot of Ant Financial is seen at its office in Hangzhou, Zhejiang province, September 21, 2016. [Photo/Agencies]

The first batch of pilot firms subject to new rules drafted by Chinese financial regulators on financial holding companies includes Alibaba's Ant Financial Services Group, Citic Group and China Everbright Group, Bloomberg reported.

The new regulation requires financial holding firms to obtain licenses from the People's Bank of China — the central bank — to conduct business, and meet minimum capital requirements for the first time according to people familiar with the draft rules, who asked not to be identified a discussing private information, the report said.

However, specifics on capital adequacy requirements were not provided.

The new rules, which need approval from China's State Council and could be issued and implemented this year, may also place restrictions on the companies' ownership structures and inter-group transactions, according to the report.

The shareholding structures of many big financial holding companies are complex and opaque, according to a previous report by China Daily.

In addition, Chinese financial regulators have been concerned about risky and opaque practices of financial holding companies, such as excessive borrowing and high capital leverage, as they could lead to wider systemic financial risks that could hurt the overall economy.

In March, former central bank governor Zhou Xiaochuan warned of rising risks associated with financial holding companies, pointing out some business groups have formed financial holding companies to control multiple financial institutions and to conduct business across different sectors, the report said.

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