On October 8, a “Notice of the General Office of the China Banking and Insurance Regulatory Commission on Reorganizing the Relevant Matters of Trust Companies’ Remote Departments” (hereinafter referred to as the “Notice”) was circulated on the Internet.
The “Daily Business News” reporter verified this document from a relevant person in a trust company. “It is currently in the draft stage for soliciting comments.” The person said. Some people close to the supervisory level also confirmed the authenticity of this document to reporters and said that they are currently seeking comments and should not be the final version.
At present, the above-mentioned “Notice” requires trust companies to rectify the remote management headquarters and remote departments within one year from the date of issuance of the notification.
It is worth noting that, in accordance with the requirements of the “Notice”, a trust company may not have a remote management headquarters or form a remote management headquarters operation model outside of the place of registration. In the rectification work of the remote management headquarters, the middle and back office departments should move back to the registration place or merge with the registration department, and the front desk department should carry out rectification in accordance with the relevant requirements of the notice. The chairman of the board (including the vice-chairman), the management and the chairman of the board of supervisors (the chairman of the board of supervisors) shall work in the registered place, and shall not have offices in other places.
At the same time, trust companies must also rectify departments in different places in accordance with the requirements. The rectification methods are not limited to mergers, divisions, relocations, and cancellations. Upon expiration of the rectification period, trust companies with remote departments should meet the relevant requirements in terms of category, number, establishment area, and staff size, and they have all been in actual operation and belong to internal formal departments.
According to the requirements of the “Notice”, the front desk department (business, marketing) of a trust company can be established in a remote place, and the middle and back office departments should be established in the registration place, and the off-site front desk department must not have business approval authority.
“Due to the lengthened management radius, most trust companies lack effective control over remote departments, accumulating hidden risks, and affecting the implementation of regulatory policy transmission. Some trust companies have severely homogenized businesses in remote departments, intensifying unnecessary internal competition and damaging the order of competition. Some trust companies have formed a remote management headquarters operation model, weakening the function of the virtual registered residence.” The “Notice” said so.
Therefore, it is mentioned in the “Notice” that the establishment of departments in different places should match the trust company’s management capabilities, medium and long-term development plans, etc., to avoid blind expansion.
According to the “China Financial Stability Report 2020”, my country’s trust industry developed rapidly from 2007 to 2017, with a compound annual growth rate of 39.36%, and the scale of the industry reached its peak in 2017. As of the end of 2019, the asset management scale of 68 trust companies across the country was 21.60 trillion yuan, a year-on-year decrease of 4.85%, which was significantly narrower than the 13.50% decline in 2018; the annual operating income was 120.012 billion yuan, an increase of 5.22% year-on-year, and the total profit was 727.05 100 million yuan.