What’s new: The central bank granted a financial holding license to a subsidiary of state-owned China Merchants Group Ltd., the third such license granted since the country enhanced monitoring of companies that have developed in multiple financial sectors.
The People’s Bank of China (PBOC) announced on Friday that it had approved the application by China Merchants Finance Investment Holdings Co. Ltd. to operate as a financial holding company (FHC), and agreed to allow the company to change its name to China. Merchants Financial Holdings Co. Ltd.
The newly licensed FHC holds stakes in about 670 financial companies spanning sectors including banking, securities, insurance, wealth management and fintech, its website says.
The background: Following a series of corporate scandals involving conglomerates such as Tomorrow Holding Co. Ltd. and HNA Group Co.Ltd.the State Council and the PBOC published rules in September 2020 that require non-financial corporations that control financial institutions in two or more different sectors to obtain an FHC license.
The rules were intended to defuse financial risks posed by companies that had become “too big to fail” and more tightly regulate tech giants that expanded into finance, such as Ant Group Co. Ltd. and Tencent Holdings Ltd.
Before China Merchants, two other state-owned companies, Beijing Financial Holdings Group Ltd. and China Citic Financial Holdings Co. Ltd., had their FHC applications approved in March. Applications from the state-owned China Everbright Group Ltd. and the private company China Wanxiang Holding Co. Ltd. are currently under study.
In the first half of 2022, China Merchants Group’s financial business earned 73.3 billion yuan ($10.6 billion) in net profit, an increase of 5.7% year-on-year, and relevant assets under management totaled more than 19 trillion yuan, China Merchants Financial said. Holdings said on its website.
Quick Takes are condensed versions of China-related stories for quick news that you can use. To read the full story in Chinese, click here.
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