Financial holding companies overhaul

Source: Xinhua | 2018-11-27

Senior managers of China’s financial firms have called for stricter supervision of financial holding companies.

Shen Rujun, general manager of Central Huijin Investment, which has invested in several financial holding companies, said there had been a number of issues both inside and outside of China.

Some financial holding companies misused financial leverages by cross-shareholding and blind business expansion, some were plagued by a cumbersome management system that lost control of their subsidiaries and suffered severe losses, while others used connected transactions to transfer benefits or risks, he noted.

Zhu Hexin, deputy governor of the People’s Bank of China, added: “Some financial holding companies have maintained barbaric growth to rampantly expand their business in the financial industry or even used financial institutions as their cash machines, which built up risks and aggravated risk exposure. Supervision, however, did not catch up.”

To deal with the issues, China’s central bank has selected five financial holding companies to explore more forceful supervision in the hope of mapping out a new oversight method in the first half of next year.

The five companies are China Merchants Group, Shanghai International Group, Beijing Financial Holding Group, Ant Financial, and Suning Commerce Group.