Monday, September 20, 2004

Okay, just a quick vent, but what is the CBRC thinking!?! The CBRC will begin collecting "monitoring fees" from all financial institutions in China, and it will be regressivly applied (bigger banks pay less than smaller banks). First of all, this flies in the face of the MOF's recent attempt to consolidate extrabudgetary fees into the national budget. The 5 billion they expect to collect is no small change, and I doubt that the CBRC on its own needs that much money. The regressive structure (see below) obviously benefits the Big Four banks, but as the article suggests, the last thing these banks need is to pay another fee to the CBRC. This money should be used to writeoff bad debt! not to pay more to the bloated bureaucracy. Sigh.....

Monday, September 20, 2004REGULATIONCBRC expects 5b yuan in new fees
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China's banking regulator expects to collect five billion yuan from mainland lenders this year as it imposes a new fee from today to cover its costs.
The China Banking Regulatory Commission (CBRC) yesterday said it was following international practice and bringing its financing in line with those of domestic securities and insurance industry watchdogs.

Critics have said regulation fees, the first to be imposed on mainland banks, will erode lenders' earnings at a time when some are trying to bolster their images and clean up their books for listings.
They argue the fees will also diminish banks' ability to reduce their non-performing loan portfolios, as many of them have been using the bulk of their earnings to write off bad debt incurred from decades of irrational lending to state firms.
The CBRC regulation fees will consist of institution regulation fees and business regulation fees.
Both are applicable to the full range of financial institutions under CBRC supervision, including commercial banks, policy banks, credit co-operatives, trust and investment companies, finance companies, financial lease companies, postal savings organisations and financial asset management firms.
The institution regulation fee takes the form of a flat 0.08 per cent annual charge on financial institutions' paid-up capital, or the working capital of foreign bank branches in China, the CBRC said.
The business regulation fees are levied regressively on banks' total assets, ranging from a rate of 0.02 per cent on the first three trillion yuan of assets to 0.01 per cent on assets between four and five trillion yuan. Assets exceeding five trillion yuan will be exempted.
The first instalment of the fees will be due within the one-month period that starts today.
Aside from CBRC's overseas counterparts in countries such as the United States, Britain, Germany and South Korea, the China Securities Regulatory Commission and China Insurance Regulatory Commission have adopted the regulatory fee schemes in recent years.
"The fees highlight the importance of regulatory costs and efficiency to both the regulator and the financial institutions under its supervision," CBRC said. "It will reduce interdepartmental policy discrepancies."

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