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Regulations Governing the Establishment of the Intra-city Business Offices by the Commercial Banks

 
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Article 1 These regulations are promulgated to standardize administration on the establishment of the intra-city business offices by the commercial banks in accordance with the laws and regulations, including the Commercial Banking Law of the People's Republic of China and the Regulations Governing Foreign Financial Institutions in the People's Republic of China.

Article 2 "The commercial banks" herein refers to the wholly State-owned commercial banks, the share-holding commercial banks, the city commercial banks, branches of the foreign banks, the wholly foreign-funded banks and the Sino-foreign joint-equity banks.

Article 3 "The intra-city business offices" herein refers to the sub-branches (referred as the intra-city sub-branches hereinafter) and the self-service banking facilities that provide financial services (referred as self-service banks hereinafter) established under the branches of the commercial banks (not including the branches) within the administrative region of a city in China.

Self-service banks refer to ATM, CDM and other self-service facilities that can provide financial services such as taking deposits, issuing loans, withdrawal of cash, fund transfer, currency exchange and information inquiry through computer and communication technology. There are two types of self-service banks: one is the self-service bank that provides all the above-mentioned services; the other is ATM, which does not have an independent premise and only provide the services of cash withdrawal, fund transfer and information inquiry.

Article 4 The People's Bank of China will examine and approve the establishment of intra-city business offices based on the following principles:

  1. The business offices shall have a rational geographical distribution with appropriate competition among each other.
  2. The setup of business offices shall be compatible with the development and performance of the local banking industry.
  3. The business offices shall satisfy the needs of the local community for banking services.

Article 5 For the establishment of the intra-city sub-branches, the commercial banks shall satisfy the following conditions:

  1. They shall have maintained branches or agencies equivalent to or above branches in the region in operation with sound asset quality for more than one year.
  2. The branches and sub-branches already established in the region shall have a strong internal control mechanism, not involved in serious violation of laws and regulations or criminal cases caused by poor internal management during the preceding year.
  3. They shall have qualified senior management team and professional staff.
  4. The senior management appointed by the commercial bank shall meet the qualification requirements set by the People's Bank of China. Each intra-city sub-branch shall have at least two senior managerial staff.

  5. The sub-branches shall have qualified premises, security arrangements and other business-related facilities.
  6. Other conditions required by the People's Bank of China.

Article 6 The working capital of an intra-city sub-branch shall be no less than RMB 10 million Yuan or the equivalent value of the freely convertible currencies.

The working capital of the intra-city sub-branches shall be allocated by the headquarter or branches of the commercial bank. In the case that the working capital is allocated by the headquarter, the amount shall be limited within the allocable capital, which is 60% of the total capital of the headquarter. In the case that the working capital is allocated by a branch office, the aggregate amount of working capital allocated to the intra-city sub-branches shall not exceed 60% of the working capital of the branch office.

The aggregate amount of working capital allocated to its intra-city sub-branches by a foreign bank branch shall not exceed 60% of the disposable working capital of the branch office. The disposable working capital refers to the remaining balance of the working capital after deduction of the 30% interest-generating assets.

Article 7 The applicant for the establishment of intra-city sub-branches can be either the headquarter or the authorized branch of a commercial bank (referred to as the applicant hereinafter).

Article 8 The establishment of intra-city business offices is subject to approval by the branches (business management offices) of the People's Bank of China or the Central Sub-branches of the People's Bank of China authorized by the branches (business management offices) of the People's Bank of China (referred to as the authorizing offices of the People's Bank of China).

Article 9 The establishment of intra-city sub-branches shall be completed in the two phases of preparation and opening for business.

Article 10 The applicant shall submit the following documents to authorizing offices of the People's Bank of China for preparing to set up intra-city sub-branches:

(1) Approval document issued by the headquarter of the commercial bank.

(2) Letter of application, which shall identify the name, premise, amount of working capital, business scope and other necessary information of the intra-city sub-branch to be established by the commercial bank.

(3) Feasibility study report, which shall include the general information of the applicant and the future market analysis, business development plan as well as the organizational and management structure of the intended sub-branches.

  1. Financial report of the applicant for the preceding year.
  2. Name list of the preparation team and Curriculum Vitae of the senior managers.
  3. Operation and management status of the offices newly established during the previous year.
  4. Other documents and materials required by the People's Bank of China.

Article 11 The authorizing offices of the People's Bank of China shall give a written reply to the applicant within three months from the date of receiving the complete application documents. If the application is rejected, the applicant cannot submit the same application within six months from the date of receiving the written reply from the authorizing offices of the People's Bank of China.

Article 12 A commercial bank can only apply to establish one intra-city sub-branch in a city with each application. Only after the application is rejected or the application for opening for business is approved, can the applicant apply for the establishment of other intra-city sub-branches.

Article 13 Only after the approval of the application for establishing intra-city sub-branches, can the applicant begin the preparation work. The preparatory period is limited to six months. The approval of the application automatically becomes invalid if the applicant fails to complete the preparation work within the limited period. With the approval of the authorizing offices of the People's Bank of China, the preparatory period may be extended for special circumstances. However, the preparatory period shall not be longer than nine months.

An intra-city sub-branch in preparatory period cannot engage in financial business activities. If the applicant changes the head of the preparatory team for the establishment of intra-city sub-branches, it shall inform the authorizing offices of the People's Bank of China in time.

Article 14 An opening for business application shall be filed and the following documents and materials shall be submitted to the authorizing offices of the People's Bank of China after the applicant has completed the preparation work:

(1) Opening for business application.

(2) Capital verification certificate provided by a certified capital verification institution.

(3) Background materials of the senior management candidates and information of the employees.

(4) Original copy of the certificate of ownership or right of use of the premises, the certificate of approval for the safety and fire prevention facilities and photocopies of the relevant certificates.

  1. Other documents required by the People's Bank of China.

Article 15 After the inspection and approval of the preparatory work, the authorizing offices of the People's Bank of China shall give a written notice to the applicant on the decision of approval or rejection within thirty days from the date of receiving the complete opening for business application package on the establishment of the intra-city sub-branch.

Article 16 In case that the opening for business application of intra-city sub-branch is approved, the applicant shall pick up the Business Certificate of Financial Institutions at the authorizing offices of the People's Bank of China with the approval documents within sixty days from the date of approval. With the Business Certificate, it can then get registered and pick up the business license at the relevant offices of the Administration for Industry and Commerce.

The opening for business approval automatically becomes invalid if the applicant fails to pick up the Business Certificate of Financial Institutions within the time limit.

Article 17 The approved intra-city sub-branch shall open for business within ninety days from the date of receiving the Business Certificate of Financial Institutions. The opening for approval business shall automatically become invalid and the authorizing offices of the People's Bank of China shall recall the Business Certificate of Financial Institutions if the applicant fails to open for business within the time limit. With approval by the authorizing offices of the People's Bank of China, the intra-city sub-branch may extend its opening for business under special circumstances. However, the extension shall not exceed forty-five days at maximum.

Article 18 The approved intra-city sub-branch shall make public announcement on its inception of business in newspapers designated by the People's Bank of China.

Article 19 The business scope of the intra-city sub-branches shall be authorized by the commercial bank within its business scope approved by the People's Bank of China. However, the business scope of the intra-city sub-branches shall not exceed that of the upper level offices.

Article 20 For the establishment of self-service banks with independent premises, the commercial banks shall file application to the authorizing offices of the People's Bank of China.

A commercial bank can only apply to establish three self-service banks in one city for each application. Only after the application is rejected or the opening for business application is approved, can the applicant apply to establish other self-service banks.

Article 21 For the establishment of self-service banks, the commercial bank shall submit the following documents or materials to the authorizing offices of the People's Bank of China:

(1) Approval documents by the headquarter of the commercial bank;

(2) Types and quantities of the service machines to be installed and types of services to be provided;

(3) Market analysis of the region, including the targeted market, service demand, competition, etc..

(4) Organization or personnel in charge of the daily management of the self-service banks;

(5) Safety control plan and maintenance measures;

(6) Other documents.

Article 22 Except the following items, the authorizing offices of the People's Bank of China shall examine and approve the application for setup of self-service banks in accordance with the conditions and procedures for approving establishment of the intra-city sub-branches provided herein this Regulations.

(1) Working capital.

(2) Senior management and employees of the financial institutions.

(3) Public announcement.

Article 23 For the establishment of ATM, which only provides services of cash withdrawal, fund transfer and information inquiry, the applicant shall report to the authorizing offices of the People's Bank of China for record and submit the documents or materials provided in Article 21.

The applicant may set up the ATM if there is no disagreement from the authorizing offices of the People's Bank of China within fifteen days from the date when the above-mentioned documents are received by the authorizing offices.

Article 24 The titles of the intra-city sub-branches of the commercial banks shall follow the formula of "Name of the commercial bank + city name + branch name + sub-branch name". The titles of the self-service banks of the commercial banks shall follow the formula of "Name of the commercial bank + 24 hour self-service bank".

Article 25 Issues not covered in the Regulations shall be dealt with according to laws and regulations of the State and relevant regulations of the People's Bank of China.

Article 26 The regulations is subject to interpretation by the People's Bank of China.

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