The China Securities Regulatory Commission appoints a new Chairman with new plans

YI Huiman, the newly appointed chairman of the China Securities Regulatory Commission (CSRC), could introduce innovative strategies to boost the country’s capital markets, experts say.

YI Huiman, former chairman of the Industrial and Commercial Bank of China (ICBC), was appointed Chairman of the China Securities Regulatory Commission (CSRC), taking over LIU Shiyu’s responsibilities, as Xinhua reported on the weekend.

“As an experienced business leader, the hiring of YI Huiman is an important signal that China is continuing to push the agenda set out in the Third Plenary Session of the 18th Party Congress announced in November 2013 – allowing the markets to play a decisive role. As an entrepreneur, Mr Yi understands the capital markets more from a market perspective,” commented Andrew Methven, Head of Strategic Consultancy at Hampton Group. “Mr Yi could take action to encourage investment firms to play a more important role as a market-based and efficient way to stimulate the market.” Chinese investment firms acting as investment banks, brokers or asset managers are crucial entities in the capital markets, but face a much less favourable regulatory environment than their global competitors.

YI Huiman began his career as a junior loan officer with ICBC in Zhejiang Province in 1985, spent 34 years with the world’s largest lender, and was appointed chairman in 2016. Due to his rich experience in the financial sector, where he had to make market-based decisions in real time, YI Huiman was rarely exposed to regulatory work, which distinguishes him from his predecessors.

DONG Dengxin, Director of the Wuhan University of Science and Technology’s Institute of Finance and Securities, agrees that YI Huiman would stick more to market-oriented measures to develop the capital markets. For example, YI Huiman could rationalise bond issuance procedures and avoid excessive administrative controls to address funding issues in the private sector.

In October, YI Huiman said liquidity bottlenecks in private companies were partly due to clogged direct funding channels, including difficulties in issuing bonds.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Hampton Group offer specialist China Business Intelligence services catering towards international businesses that want to thrive in China. We provide Policy Insight, analysing changing policies and regulatory environment that can impact business approach.

The influence of Chinese banks in Europe is increasing

The Agricultural Bank of China has celebrated the opening of their London branch this Tuesday. This is the latest step in the expansion of European business operations of the ‘Big Four’ – Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and Agricultural Bank of China (ABC).

Earlier this year ICBC received their banking license in Switzerland. ICBC – the largest bank in the world by total assets and the most valuable bank in the world by market capitalization – has been licensed by the Swiss Financial Market Supervisory Authority Finma as a bank. Starting their European operations in the UK in 1995, it was formally established in 2013 in the City of London and has since expanded its operations from London to all major European cities, opening their latest branch in downtown Zurich.

ICBC, headquartered in Beijing, is one of the largest credit institutions in China, with more than 460,000 employees and just under 20,000 branches. The financial group was founded in 1984 and completely restructured in 2005, whereby the transformation into a private company took place. In addition to serving business and private customers with all industry-standard banking services, its core business also includes other credit card and e-banking services. The company reported revenue of £115.7 billion for the fiscal year 2016, with a profit of £32.1 billion.

The dominance of Chinese financial institutions has been growing for years. As the data service SNL Financial announced in 2015, four of the world’s five largest banks alone now come from China. Due to currency effects, European and Japanese banks fell behind. The top five also include the Agricultural Bank of China and the Bank of China.

The influence of Chinese banks in Europe, which has become increasingly noticeable and increasing for some time now, is an extension of the growing role they already play on other continents. According to Merrill Lynch, Chinese banks in Australia, for example, have already spent a considerable share of the new syndicated loans together with Japanese competitors in the recent past. In this way, they are chasing away significant market shares from down turning European banks in Australia.

The arrival of powerful Chinese banks is relatively new to the European market. The weakness of European financial services gives Chinese banks the best chance of gaining a foothold in financial markets, which are among the most competitive in the world.