State Council Report: Concentrate on Building a "National Team" in the Financial Industry

Recently, at the ninth meeting of the Standing Committee of the 14th National People's Congress, entrusted by the State Council, Vice Minister of Finance Liao Min made a report on the research and handling of the deliberation opinions of the special report on the management of state-owned assets of financial enterprises and the situation of rectification and accountability. The report introduces the ideas and measures of relevant departments to improve their work, including optimizing the functional positioning and strategic layout of state-owned financial capital, improving the management system and mechanism of state-owned financial capital, promoting the quality and efficiency of financial state-owned assets and state-owned enterprises, improving the level of financial services for the real economy, and strengthening the risk prevention and control of state-owned financial assets.

In order to clarify the responsibilities of different state-owned financial capital contributors, the report mentions speeding up the promulgation of regulations on the management of state-owned financial capital and doing a good job in the transfer of market operating institutions; centering on improving the quality and efficiency of financial state-owned assets and state-owned enterprises, the report mentions concentrating efforts on building a "national team" in the financial industry and actively supporting major state-owned banks in issuing total loss-absorbing capacity (TLAC) bonds, and allowing insurance companies to issue perpetual bonds.

In addition, for financial services for the real economy, the report mentions the role of state-owned financial enterprises as the "head goose", doing a good job in five major articles, strengthening the balanced supply of credit, giving full play to the role of fiscal funds, increasing policy support for the private economy and small, medium and micro enterprises, and playing the role of insurance companies as market stabilizers. In terms of risk prevention and control, the report focuses on the support of state-owned financial enterprises for the resolution of local debt risks, and mentions the research and drafting of regulations on the punishment of managers of state-owned enterprises.

Adjust the proportion of state-owned financial capital industry and build a "national team" in the financial industry

The report is the Ministry of Finance, the People's Bank of China, the National Audit Office, the State Administration of Financial Regulation, the China Securities Regulatory Commission and other departments and units in accordance with the sixth meeting of the Standing Committee of the 14th National People's Congress on the "State Council Special Report on the Management of State-owned Assets of Financial Enterprises in 2022", decomposed and detailed one by one, and studied and put forward ideas and measures to improve the work.

According to the report, the deliberation opinions raised issues such as the "dominance of banking institutions" and the weakening of policy-based financial functions in recent years. In this regard, the Ministry of Finance and the financial management department have promoted the further optimization of the layout of state-owned financial capital, rationally adjusted the proportion of state-owned financial capital in various financial industries, deepened the reform of policy-based financial institutions, increased the supply of policy-based finance, and promoted the differentiated development of state-owned financial enterprises.

The report lists three measures in this regard: first, to accelerate the optimization of the layout and structural adjustment of state-owned financial capital, second, to continue to strengthen the positioning of policy-based financial functions and increase supply, and third, to focus on promoting the differentiated development of central and local state-owned financial enterprises.

Specifically, it includes studying and improving the layout of state-owned financial capital and effectively giving play to the leading role of state-owned financial capital in the financial field. At the same time, it is necessary to study in depth the proportion of state-owned financial capital in banking, insurance, securities, and other industries in a timely and rational manner through such means as replenishing capital and increasing profits, and in accordance with the principle of "advancing and retreating, and rational flow."

For policy finance, the report mentions that it is clear that policy finance should focus on serving the national strategy, and mainly do business that commercial finance cannot do and cannot do well. Implement the reform of policy-based banking business, promote its focus on its main responsibilities and main business, and strictly control commercial business. Research and improve the assessment and evaluation mechanism of policy-based financial institutions, and guide policy-based financial institutions to strengthen their support for major national strategies, key areas and weak links through improving corporate governance.

The report mentions that the central financial enterprises will be supported to further strengthen and optimize and strengthen financial support for major national strategies, scientific and technological innovation, and green and low-carbon financial support.

The report also emphasizes the reform of the rural credit system, including adhering to the positioning of supporting agriculture and supporting small enterprises, promoting the reform of rural financial institutions with "one province and one policy", and promoting the implementation of the reform plan of rural credit cooperatives in Hainan and Sichuan.

The deliberation opinions also raised the issue of the huge scale of the mainland's financial industry, but its competitiveness needs to be enhanced. In this regard, the Ministry of Finance and the financial management department have taken the initiative to continue to make efforts to promote the high-quality development of financial state-owned assets and state-owned enterprises, and to improve the overall operational efficiency of the financial industry.

First of all, we should concentrate on building a "national team" in the financial industry. The measures mentioned in the report include studying and drafting an action plan for strengthening the management of state-owned financial capital, promoting large state-owned financial enterprises to benchmark themselves against world-class financial enterprises, studying and formulating guidance on promoting the high-quality development of the insurance industry and other industries, and promoting the standardized development of non-bank financial institutions, promoting the strengthening and optimization of leading securities companies, and supporting the Shanghai and Shenzhen stock exchanges to build world-class exchanges.

Second, improve the profit distribution and capital replenishment mechanism. In terms of enhancing the ability of endogenous capital replenishment, combined with the development needs of different industries and different types of financial enterprises, we will study and optimize the profit distribution and increase capital replenishment mechanism of state-owned financial enterprises, and improve the rules for classifying and classifying the proportion of earnings handed over by state-owned financial enterprises.

In terms of broadening the channels for replenishing external capital, the report mentions actively supporting large state-owned banks to issue TLAC bonds, allowing insurance companies to issue indefinite bonds in the interbank bond market to replenish capital.

Strengthen the balanced allocation of credit and give full play to the role of fiscal funds

In terms of financial services for the real economy, the issues raised in the deliberations include the lack of willingness and strength of state-owned financial enterprises to support private enterprises, especially small and micro enterprises. According to the report, the Ministry of Finance and the financial management departments have actively taken various measures to guide state-owned financial enterprises to take the initiative and play the role of "head geese".

Specifically, the report mentions that in terms of promoting state-owned financial enterprises to better serve the real economy, guide state-owned financial enterprises to take the initiative, enrich and improve the medium and long-term planning of enterprises, and do a good job in the "five major articles". At the same time, we will continue to improve the performance evaluation system of different industries, strengthen the long-term assessment of the efficiency indicators of state-owned commercial insurance companies, and guide them to better play the role of market stabilizer and economic development booster of medium and long-term funds. Guide exchanges and market operating institutions to firmly serve the concept of the real economy, and encourage more funds to flow to the real economy.

With regard to the credit allocation of large state-owned banks, the report mentions strengthening window guidance to guide state-owned commercial banks to focus on strengthening the balanced provision of credit.

The report also emphasizes the leverage role of fiscal funds, including revising and promulgating the management measures for special funds for the development of inclusive finance, increasing the upper limit of guaranteed loans for entrepreneurship, relaxing the application conditions for small and micro enterprises, and introducing government financing guarantees and credit enhancement to increase financial support for entrepreneurship and employment.

The report mentions the circular issued last year on strengthening financial support measures to help the development and growth of the private economy, as well as continuing to carry out projects to improve the financial service capacity of small, medium and micro enterprises, carrying out the supervision and evaluation of financial services for small and micro enterprises of commercial banks, and speeding up the establishment of a long-term mechanism of "daring to lend, willing to lend, able to lend, and will lend".

In response to the problems raised in the deliberation opinions, such as the imperfect risk management and control system of some state-owned financial enterprises, the lack of strict implementation, and the existence of illegal business activities, the Ministry of Finance and the financial management department have taken multiple measures to promote the improvement of the system and mechanism, and continuously consolidate the main responsibility of risk prevention and control of state-owned financial enterprises.

Specifically, in terms of strengthening the risk prevention and control of state-owned financial enterprises, the report mentions a number of measures, including guiding state-owned financial enterprises to strictly follow the principles of marketization and rule of law, actively, prudently, effectively, orderly and effectively support the resolution of local debt risks, and strictly prevent secondary risks; Risk monitoring and early warning system, establish an off-site monitoring and early warning mechanism for banks, and study and revise the calculation standards for risk control indicators of securities companies.

(This article is from Yicai)