China asks EU to reconsider supervision requirements for non-EU financial institutions

BEIJING - China has asked the European Union to reconsider proposed supervision rules that require non-EU financial institutions with assets of 30 billion euros or above to set up parent holding companies, a central bank statement said Tuesday.

The European Commission, the executive of the EU, proposed in November 2016 that certain non-EU financial institutions above the threshold consolidate their EU activities under holding structures called intermediate parent undertakings (IPUs), which would mirror similar regulatory moves in the United States.

In a joint letter issued by the People's Bank of China and China Banking Regulatory Commission in response to the latest suggestions by the Council of the EU in November with regards to IPUs, China reminded the EU authorities that Chinese authorities have not set up IPU requirements in this respect yet.

The 30 billion euro threshold was too low, in contrast to the US threshold of $50 billion and also excluded banks in a statistical range, the joint letter said, noting that the high cost in meeting the requirements may outweigh supervision results.

The letter asked the European authorities not to include the total assets of branches at non-EU financial institutions in their calculations on the setting-up of an IPU and not to include subsidiary banks into the IPU framework, since the moves were considered unnecessary for the time being.

"China has signed multiple memorandum of understanding on cooperation with many EU countries and held joint meetings to strengthen supervision cooperation with these countries and to ensured sound and stable run of branches of Chinese banks within EU jurisdiction," the statement said.