Commission to Increase Capital Requirements of Foreign Investors

Commission to Increase Capital Requirements of Foreign InvestorsIn a bid to further boost risk management, the county’s banking regulator will be tripling the minimum registered capital requirement for all foreign bank and joint venture banks. The China Banking and Regulatory Commission have raised the minimum capital requirement to 1 billion yuan from the previous 300 million yuan for these new ventures.

Last august these Chinese regulators tightened the rules and regulations on foreign banks in setting up offices in the country. These regulators have also released outlined plans in increasing capital adequacy requirements and at the same time to impose stricter measures on incoming foreign investment. The China Banking and Regulatory Commission is also seeking public opinions on its intended plan and will be expanding the scope of the permitted activities for foreign banks that will include yuan denominated loans and wealth management using overseas investments products. And to tighten risk control the commission will limit foreign banks derivatives by basing it on their qualifications and experience.

From 2004 until 2008 china saw a surge of investments into its State owned banks as the country sought to turn them into commercial entities as part of banking reforms. These foreign banks have helped Chinese banks to become more market oriented but recently several foreign investors have sold their stakes to gain huge profits.

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