China Considers Merger of Banking, Insurance Watchdogs

by Dramelin 11:00 PM 0 comments

Seen as attempt to coordinate campaign against financial risk China is considering a merger of its banking and insurance regulators, people familiar with the matter said, as it seeks to better coordinate its attempts to counter financial risks in the world’s second-largest economy.
Government agencies under the direction of a Communist Party central reform group led by President Xi Jinping are drafting a plan that would combine the China Banking Regulatory Commission and the China Insurance Regulatory Commission under a single head, the people said, asking not to be named because they aren’t authorized to discuss the matter publicly.
The possible regulatory shake-up suggests that China’s leadership wants to streamline its campaign to deleverage the economy, a top priority as Xi began his second five-year term last year.
Both banks and insurance companies have been involved in the rapid growth of China’s shadow banking sector, another key focus of the regulatory clampdown.
The plan, which is under discussion and may yet still change, could be announced after the National People’s Congress begins its annual session on March 5, two of the people said.
Alternative plans that have been discussed include creating a “super-regulator” that also includes the central bank and stock market watchdog, as well as giving the People’s Bank of China greater oversight over the other three main regulatory bodies.
The CBRC, CIRC and State Council -- which represents the government -- didn’t immediately respond to faxed requests for comment.
Last year, Xi announced the creation of a new Financial Stability and Development Committee to improve coordination among different government agencies as economy-wide debt approaches 260 percent of output.
Liu He, a key economic adviser to Xi, may soon head the body.
Read about ‘The Brain’ behind the overhaul of China’s economy After his appointment last year as CBRC chairman, Guo Shuqing has embarked on a campaign to root out malpractice in the banking industry, improve implementation of lending policies and curb cross-holdings of financial products.
Earlier this month, the CBRC slapped a 462 million yuan ($72 million) fine on Shanghai Pudong Development Bank Co.
, accusing it of hiding its non-performing assets.
The chairmanship of the CIRC remains vacant after its former head Xiang Junbo was removed in April amid corruption allegations.
— With assistance by Keith Zhai, Dingmin Zhang, Jun Luo, and Steven Yang.