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Disclosure of non-compliant shareholders positive for banks' corporate governance: S&P

July 15, 2020


Abstract : The disclosure of the non-compliant shareholder list would serve as an effective deterrence against future bad behavior by shareholders in financial institutions, particularly small- and mid-sized banks, a report by S&P Global (China) Ratings said on Monday.

BEIJING, July 15 (Xinhua) -- The disclosure of the non-compliant shareholder list would serve as an effective deterrence against future bad behavior by shareholders in financial institutions, particularly small- and mid-sized banks, a report by S&P Global (China) Ratings said on Monday.

The institute believed the mega banks and most joint-stock banks had sustainable corporate governance frameworks in place, and that the majority of problems involving serious shareholder misbehavior typically concerned certain regional banks and small rural credit institutions.

On July 4, China Banking and Insurance Regulatory Commission (CBIRC) disclosed for the first time a list of financial institution shareholders that have breached regulatory rules or laws in their dealings with banks, insurance companies and other finance companies in which they had invested. CBIRC has indicated that it would make such disclosure a regular activity.

Although shareholder misbehavior may be an acute problem for a few regional banks, it is a contained problem which won't destabilize the overall banking sector, according to the report.

Among the 38 shareholders whose names were disclosed, S&P Global (China) Ratings believed most of them were shareholders or previous shareholders of several small and mid-sized regional banks. They estimated that these banks had an aggregate asset size of about 1.5 trillion yuan, accounting for about 0.6 percent of the total assets of China's banking sector.

Most of the banks involved are able to maintain normal operations thanks to strong intervention from the regulator, according to the report.

S&P Global (China) Ratings believed the measure played an important role in helping regional banks maintain a sound credit profile as they faced capital and asset quality pressure amid the COVID-19 epidemic. (Contributed by Wu Congsi; edited by Yang Qi with Xinhua Silk Road, kateqiyang@xinhua.org)

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Keyword: banking CBIRC

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