Regulators in China
The supervisory and regulatory bodies for the financial industry in China are:
Regulatory Environment — China
Balance sheet reporting
Profit and loss reporting
Capital adequacy reporting
Interest rate risk reporting
Loans, advances and provisions reporting
Large exposures reporting
Foreign currency position reporting
Deposit reserve ratio
Monthly statistics of real estate related loans
Housing loan statistics
Corporate loan statistics
External position reporting
Related party transaction reporting
Derivative transaction reporting
Securities transaction reporting
Firms are faced with investing time, effort and resource to:
So how can we help you?
Wolters Kluwer Financial Services provides regulatory reporting solutions throughout the world for banks, insurance companies, and other financial institutions. By leveraging a global data model (DataFoundation), a standardised integral development environment, fully integrated calculation capabilities and a global runtime engine for reporting, we can provide local reporting efficiently consistently for any jurisdiction.
The main benefits of the our regulatory reporting solution include:
As leaders in the field of risk and regulatory solutions Wolters Kluwer Financial Services understands your business needs. Our heritage in and in-depth knowledge of the financial market enables the development of our solutions to be so flexible that they meet the needs of ALL firms whatever the size or complexity.
Wolters Kluwer Financial Services leads the way in risk and regulatory compliance solutions and has many referenceable clients who have successfully deployed solutions covering regulatory reporting and risk management.
Wolters Kluwer Financial Services provides full coverage to all banks legally bound to report to CBRC, PBOC and SAFE.
Asset & Liability Management (ALM)
ALM is being embraced as more than just a tool to monitor and manage interest rate risk in the banking book. It is a process for managing balance sheets against other risks that affect earnings and portfolio valuations of banks, shifts in customer behavior, future balance sheet growth, and impact of business strategies (pricing, hedging, growth, and planning).
In light of the financial crisis, firms of all shapes and sizes are re-evaluating their ALM model. In order to earn an adequate return, the need to assess and mitigate the adverse value and income impact of changes in the market has become even more vital.
So how do different types of financial institutions manage their ALM requirements today?
Large, tier one firms typically develop their ALM systems in-house, a luxury few smaller firms can’t afford. These systems typically include sophisticated and finely tuned functionality for value exposure, value-at-risk, dynamic simulation, earnings-at-risk, and treasury view.
In the past, smaller firms have found solutions for meeting ALM requirements to be over-complicated, difficult to integrate with incumbent systems, resource-dependent and cost-prohibitive. For these reasons they have resorted to using alternative methods such as spreadsheets or independent consultants, neither of which is ideal.
Until now the sheer cost of developing and supporting an in-house ALM system has been restrictive to smaller firms but the need to have accurate visibility into the future position of the firm is critical.
Our heritage and in-depth knowledge of the market have enabled the configuration of our solution to be so flexible that it meets the needs of ALL firms; from those with highly complex derivatives to those with a vanilla approach.
Our ALM solution provides a comprehensive range of capabilities covering the following areas:
And for the smaller firm
Our rich ALM solution offers functionality that delivers immediate return on investment by taking a ‘compact’ approach with risk management features that absorb complexity. Along with evaluating a mismatch between assets and liabilities, our ALM solution also manages risks arising due to liquidity and interest rate in banking books.
With our ALM solution firms can:
The 6-step process for ALM
The China Banking Regulatory Commission (CBRC) asked commercial banks in China to maintain a minimum capital adequacy ratio (CAR) of 8 %. Systematically important financial institutions (SIFIs) need to maintain additional surplus. Thus large, small and medium sized banks need to maintain a CAR of 11.5 and 10% respectively. [LD1]
Banks need to adhere to the following CBRC instructions while calculating CAR:
In 2010 CBRC completed the periodic assessment of large banks for the implementation of Basel II so that the banks get to know the importance of implementing an effective approach to optimize their capabilities of decision making, capital management and risk control.
As the global influence of banks has shifted away from North America and Europe, leading banks in China and developed markets in Southeast Asia are well prepared to adopt the internal model approach (IMA) to market risk, the advanced measurement approach (AMA) to operational risk, and the internal ratings based approach (IRB).
Our solution provides a sophisticated Basel II module with the ability to calculate the capital charge for credit risk, market risk and operational risk. It can be used as an independent standalone solution or in combination with our other reporting and risk management solutions assisting banks to meet regulatory requirements and improve their performance over risk.
Adoption of the IFRS7 and IAS 32, 39
Employ dynamic ALM for better balance sheet management
The Ministry of Finance promoted new accounting standards referred to as IFRS which needs to be followed by all the listed organizations.
The China Banking Regulatory Commission (CBRC) issued a notice on banking financial institutions integral implementation of the accounting standards in September 2007. All the financial institutions including the policy banks, joint stock banks, city commercial banks, trust and investment companies, financial leasing companies, auto financing companies, money brokerage companies, foreign funded banks need to comply with the International Accounting Standards (IAS).
Our IFRS solution enables classification of financial instruments and calculation of valuations using appropriate fair values or amortised costs. It also supports several methods for testing and estimating impairment as required by IAS 39.
Read more about the IFRS solution here.
Unit A1-F, 10/F,
Liquidity Risk Management
With lessons learnt from the recent liquidity crunch, banks are going beyond simple static financial ratios and gap reports as measures of liquidity risk management. Recent efforts by the European Banking Authority – EBA (formerly Committee of European Banking Supervisors- CEBS), the Basel Committee on Banking Supervision (BCBS) and the UK FSA, in terms of principles and recommendations have set greater emphasis on liquidity risk management.
Since the BCBS issued its final paper, ‘Principles for Sound Liquidity Risk Management and Supervision’, banks have been adopting liquidity stress testing scenarios to simulate bank-specific and system risks to their balance sheets.
By modelling their liquidity contingency plans against such scenarios, the measure of a bank’s cash-flow survival horizon can be derived, giving a statement of the effectiveness of its plan against such crisis.
The China Banking Regulatory Commission (CBRC) published a draft on commercial bank liquidity risk management to strengthen the liquidity risk management and maintain safe banking system in China.
The major banks in China will have to implement the liquidity standards by the end of 2013 and others need to implement the same by the end of 2016. With our solution and experts keeping eye on global regulatory change, banks need not worry about the changes in reporting requirements.