The China Banking and Insurance Regulatory Commission ("CBIRC") has recently issued the Measures for Net Capital Management of Wealth Management Subsidiaries of Commercial Banks (for Trial Implementation) (the "Measures"), with effect from March 1, 2020.
The Measures contain 20 articles divided into four chapters which are general provisions, criteria of net capital regulation, supervision and administration, and supplementary provisions. According to the Measures, the net capital management of a wealth management subsidiary shall meet the criteria in two aspects. First, its net capital shall be no less than CNY500 million and account for no less than 40% of the net assets. Second, the net capital shall be no less than the venture capital, which ensures the wealth management subsidiary retains sufficient net capital. The Measures expressly state that the board of directors of a wealth management subsidiary shall bear ultimate responsibility for the management of the subsidiary's net capital, while the senior management shall bear responsibility for specific work on net capital management. A wealth management subsidiary shall periodically submit the statements for net capital regulation and bear liability for the truthfulness, accuracy and completeness of such statements; it also shall timely report on any major changes to relevant regulatory indicators, and disclose in its annual reports the information on net capital management.