Chinese companies outside the finance industry that own two or more financial institutions will now have to register as a financial holding company to comply with a slate of new rules, reported Caixin.
The new rules, released Sunday by the State Council — China’s cabinet — and the People’s Bank of China (PBOC), aim to bring nonfinancial companies, including Ant Group, into the financial fold.
At a Monday briefing about the new rules, PBOC Deputy Governor Pan Gongsheng noted that “some nonfinancial companies have expanded blindly, causing risks to mount.” Pan said that the rules create a basic policy framework to regulate financial holding companies, and more detailed and specific rules will be needed to oversee things like consolidated financial statements, asset management and connected transactions.
The rules — set to take effect on Nov. 1 — require such companies to have at least RMB 5 billion ($731 million) in registered capital to qualify to be licensed as financial holding companies. Nonfinancial companies that control commercial banks with assets in excess of RMB 500 billion must be registered as financial holding firms, according to the rules.