China gets tough on financial sector risk management, extends contingency planning to more institutions
- Contingency planning has been a requirement for China’s biggest financial institutions for a decade now
- Recovery, contingency planning conducive to shoring up risk awareness and crisis management capacity, CBIRC says
The requirement now also applies to all commercial banks, rural credit co-operatives, asset management firms and financial lease companies with 300 billion yuan (US$46.9 billion) or more in assets, besides insurers with assets worth at least 200 billion yuan.
The expansion is aimed at ensuring that financial institutions do not need to be bailed out with taxpayers’ funds during unlikely but possible financial crises and sudden adverse economic events.
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The policy, effective immediately, will help the financial institutions newly brought under its purview ensure that their key operations and services will not be suspended due to adverse events, the CBIRC said. It will also protect consumers’ interests and ensure financial stability of the society at large, the regulator added.
