China steps up corporate governance watch on financial institutions

China said on Wednesday it will bring more types of companies under the measures to oversee corporate governance at financial institutions by its banking and insurance regulator in an effort to prevent systemic risks.

It will include rural cooperative banks, financial asset management companies, financial leasing companies and consumer finance companies to the scope of supervision, according to the revised measures released by the China Banking and Insurance Regulatory Commission on its website.

Regulatory officials have vowed to rein in financial risks as growth in the world's second-biggest economy slowed this year, hit by strict COVID-19 curbs, a deepening property crisis and weakening demand.


The measures, which were first released in 2019, ranked banking and insurance institutions based on their performance in regulation compliance, internal management and shareholding governance.

Institutions that have a debt repayment crisis or lack of solvency are graded as E, the lowest ranking.

The 2019 version of the measures said institutions that are graded as D and E will face tighter oversight or punishment, including suspension of some businesses or limitation to dividends to shareholders.

The latest revision said institutions that are graded D or below will be treated as "key regulatory objects," and regulators will make early intervention on their potential risks.