BEIJING, Nov. 8 (Xinhua) -- China's banking regulator is working on a guideline for supervision of cross financial operations of banking institutions, such as those in insurance and securities sectors, to identify hidden risks in the financial system, said Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission (CBRC) on Thursday.
Chinese commercial banks have been setting up or purchasing trust companies, leasing firms, insurance and securities brokers in recent years to expand and diversify their businesses. "We are trying to avoid risks resulting from the lack of supervision over the emerging umbrella bank groups, which have subsidiaries in insurance and securities businesses," said Jiang at the International Finance Forum in Beijing.
Diversified services in such banking groups have helped improve the competitiveness of banks and their risk control capabilities, but new risks came along as well, Jiang
Lack of transparency within the banking group, for instance, had made it possible to transfer assets and risks among different subsidiaries and the parent company due to absence of supervision.
"The U.S. sub-prime crisis overshadowing the U.S. and global markets was one example of hidden risks," he
The new regulation aims to realize a concentrated supervision of banking groups as a whole, by putting all of their subsidiary business operations under supervision, Jiang
said. In the present system Chinese banking institutions, securities companies and insurance firms were separately supervised by independent regulators: the CBRC, the China Securities Regulatory Commission (CSRC), and the China Insurance Regulatory Commission (CIRC).