BEIJING China's central bank issued rules on Thursday for managing financial holding companies' affiliated transactions to help curtail risks and ensure financial stability, according to a statement on the regulator's website.
The People's Bank of China said that the rules, which follow a draft version in August, will promote stable and healthy operation of financial holding companies and prevent financial risks. Financial holding companies' transactions with related parties will not be allowed as an improper transfer of interests will not be allowed. The firms are not allowed to design complex structured products for affiliated transactions to hide risks and sidestep supervision.
Financial holding firms will be required to improve the management, reporting and disclosure mechanisms of their affiliated transactions.
In 2020, China required non-financial conglomerates with multiple units in the financial sector to register as financial holding companies. It was part of efforts to tighten oversight of companies that sidestepped regulatory supervision to expand and pose systemic financial risks.
In March of last year, the regulators approved the first batch of financial holding firms - China CITIC Financial Holdings and Beijing Municipal Government-owned Beijing Financial Holdings Group.
In September, the central bank granted a third license to the state-owned China Merchants Group.