In Business, What Is a Past Service?

Commercial banks' intermediary business is broadly defined as "businesses that do not constitute on-balance sheet assets or on-balance sheet liabilities of a commercial bank and form non-interest income for the bank". ^[1]

Bank Intermediary Business

Right!

Intermediate business

Commercial Bank Intermediary Business

Compared with the on-balance sheet assets business of commercial banks, the intermediary business of commercial banks has the following functions.

First, it does not directly constitute the on-balance sheet assets or liabilities of a commercial bank, and the risks are relatively small, providing tools and means for the risk management of a commercial bank. Commercial banks do not directly participate in the capacity of creditors or debtors when they handle intermediary business, and do not directly constitute the on-balance sheet of commercial banks.

Compared with other foreign banks, the development of China's modern banking system is not very long, and it has experienced many twists and turns during the development process. There is no mature and stable operating system and environment, and it has not operated in a market-oriented manner, leading to commercial Banks rely heavily on the spread of deposits and loans to maintain a high level of profit income. Simple and readily available income has also made commercial banks extremely inert. These series of factors also directly lead to the very low proportion of China's commercial bank's intermediary business income in commercial bank revenue.

(1) Recognition issues. Knowledge is the precursor of action. In a certain sense, the degree to which the senior management of a commercial bank recognizes the importance of developing intermediate business determines the degree of development of the bank's intermediate business. Restricted by the system, vision, ideas, thinking mode, and practical experience, some domestic banks did not understand enough about the rapid development of the international banking industry's intermediate business, and the survival and development of commercial banks after accelerating the pace of interest rate marketization and the full opening of the financial market Lack of understanding of the pressure, the upcoming implementation of the "Basel New Capital Accord", insufficient understanding of the impact of capital constraints on commercial banks' asset-liability business, heavy asset-liability business, lighter intermediate business, still consider the intermediate business as an expansion of traditional deposit and loan business As an auxiliary means, there is not much thinking, research and investment in intermediate business, and the initiative and urgency of developing intermediate business is not strong.

(2) There are few types of intermediate business and single means. After more than ten years of development, although the variety of intermediate business of Chinese-funded commercial banks has increased greatly, compared with foreign banks, compared with market demand, there are still fewer varieties. The existing intermediate business of Chinese-funded commercial banks is mainly limited to traditional settlement, exchange, collection and payment, as well as credit cards, letters of credit, and remittances, which account for about 60% of the types of intermediate business. In terms of using commercial bank information, technology and talents to provide customers with high-quality and high-level services, it is still relatively lacking; consulting services, investment and financing, and derivative financial instrument transactions such as high-tech, high-value-added intermediate services The development is obviously inadequate, the coverage is narrow, and no scale benefits can be formed; in particular, cash management, project financing, syndicated loan organization arrangements, acquisition and merger consultants, and other policies that allow for large market demand have a low level of business development, resulting in homogeneous products There are many brand products and special businesses, and the profitability and competitiveness of individual products are not strong. The "Ericsson Incident" that occurred in 2002 reflects from another aspect that in the face of ever-changing customer demands, if it cannot provide a continuous stream of innovative products, commercial banks will not be able to take the initiative in market competition, which will inevitably lead to high-quality customers. Churn. The current problems of commercial banks' intermediate business products not only expose weaknesses such as lack of innovation power and vitality of commercial banks, lagging product management, etc., but also reflect problems in bank supervision, such as complex approval procedures, long approval cycles, and coordination between regulatory authorities. The mechanism needs to be further improved.

(3) Irregular operation and lack of complete and systematic scientific management. At present, most domestic commercial banks do not have a specialized agency to systematically manage the development and operation of intermediate businesses, and lack long-term planning, coordination and cooperation. In operation, most commercial banks are limited to issuing intermediate business completion plans, and there is no complete set of management methods and practical operating procedures for how to strengthen the organization of intermediate business development and improve the level of development. Insufficient financial resources often put grassroots banks in a passive position in the development of intermediate business markets. In addition, the management mode of intermediate business is also mostly a split-type model, and the management of intermediate business is completed by different departments. This decentralized management, and each department often adopts different business management methods, different assessment objectives and incentive measures, which is not conducive to information communication, but also to improve management efficiency, and it is not conducive to the formation of scale effects. Promote the development of intermediate business.

(4) Irrational competition is prominent, and low-level competition is more common. The irregular inter-bank competition has hindered the advancement of commercial banks' intermediary business to a certain extent, which is an urgent problem to be solved. As the intermediary business increasingly becomes an important area of competition among commercial banks, each act has occupied the market and increased its scale. They have adopted the practice of lowering fees, no fees, and even discounting. You are high and low, you are low and you are free, and you are free from discounts. It seriously threatens the development of the intermediate business market. The most direct consequence is that the volume of intermediate business is not proportional to the income. In addition, in terms of innovation in intermediate business, many commercial banks follow the doctrine of adoption, adopt a follow-up strategy, wait for other banks to develop new products, and then plagiarize and imitate, keep up with the introduction of similar products, and supplement them with low-price strategies, which harms other commercial banks Interests.

(5) Unbalanced development. Judging from the grasp of the situation, the development level of the intermediate business of domestic banks is uneven, and the contrast is large. First, the development of regions is uneven, the development of the eastern region is relatively fast, and the development of the central and western regions is relatively lagging; the second is that the state-owned or state-controlled large banks and medium-sized joint-stock commercial banks are developing faster, and the development of small banks is relatively lagging; The gap between Chinese banks and foreign banks in China is large. Regarding these issues, if effective measures cannot be taken, the gap between the eastern and central and western regions, large and small banks, Chinese banks and foreign banks will continue to widen, which will not be conducive to the improvement of the overall level of China's banking intermediate business. .
(6) The contribution to operating efficiency is still insufficient. At present, the proportion of commercial banks' intermediary business income to operating income is still significantly lower, and their contribution to the overall profitability of commercial banks is still limited. In 2004, among the four major banks, the proportion of intermediary business in operating net income was only 14% of the Bank of China, and the other three banks were below 10%. Some emerging joint-stock commercial banks may have a slightly higher proportion of income from intermediary business due to their smaller assets, but overall, they are still relatively low, and the gap is relatively large compared with foreign commercial banks.

(7) Insufficient knowledge and measurement of intermediate business risks. While intermediary business helps banks improve efficiency, profitability, and service levels, it also brings various risks to banks, such as credit risk, market risk, operational risk, legal risk, reputation risk, and technical risk. Take strict precautions. In particular, banks currently lack management experience in many intermediary businesses and lack of awareness of potential risks. Judging from the scope of the intermediate business as determined by the Commercial Bank Law and the Interim Provisions on Intermediate Business of Commercial Banks, except for guarantee commitment business and financial derivative transaction business, most businesses are low-risk businesses, but low-risk does not mean no risk . Judging from the regulatory practices of the past few years, intermediate business risks are mainly manifested in policy risks, operational risks, related risks and reputational risks. For example, the CBRC has accepted various aspects of the individual products and individual wealth management products cooperating with intermediaries such as securities companies, and made risk reminders.

(8) The strength of professional talents and technological support is insufficient. Intermediate business involves a wide range of fields and a wide range of knowledge, and requires a large number of high-level, composite talents. At present, China's commercial banks have insufficient support for the development of intermediate businesses, either in terms of professional talents, or in technical equipment and techniques. They lack efficient information management systems and supporting equipment, and they are not familiar with banking operations and computers, international finance, Compound talents with expertise in investment and securities, some of whom have aging knowledge, low business quality, incomplete marketing skills, and low bargaining power, have restricted the promotion of new products and the improvement of the quality of intermediate business services. ^[9]

Article 1 In order to further promote the development of intermediary business of commercial banks, standardize and improve banking services, improve competitiveness, and effectively prevent financial risks, special measures are formulated in accordance with the "People's Bank of China Law" and the "People's Republic of China Commercial Bank Law" This provisional provision.

Article 2 The commercial banks referred to in these interim regulations refer to the banking institutions established in accordance with the "Commercial Banking Law of the People's Republic of China" to absorb public deposits, issue loans, and settle transactions.

Article 3 The "intermediate business" as mentioned in this provisional regulation refers to the business that does not constitute on-balance sheet assets or on-balance sheet liabilities of a commercial bank, and forms non-interest income of the bank.

Article 4 Commercial banks shall start the intermediary business with the approval of the People's Bank of China and accept the supervision and inspection of the People's Bank of China.

Article 5 A commercial bank applying for starting an intermediate business shall meet the following requirements:

(1) meeting the objective needs of the development of financial markets;

(2) Does not harm the economic interests of customers;

(3) It is conducive to improving the service functions of the bank and improving the profitability of the bank;

(4) Formulating corresponding business rules and regulations and operating rules;

(5) Having qualified management personnel and business personnel;

(6) Having a support system suitable for conducting business;

(7) Other conditions required by the People's Bank of China.

Article 6 The People's Bank of China implements an examination and approval system and a filing system in accordance with the risks and complexity of commercial banks in running intermediate services.

Businesses that are subject to the approval system are mainly intermediate businesses that form contingent assets or contingent liabilities, and some intermediate businesses that are related to securities and insurance business. Businesses that apply the filing system are mainly intermediate businesses that do not form contingent assets or contingent liabilities. .

Article 7 The types of intermediate businesses to which the approval system applies include:

(1) bill acceptance;

(2) issuing a letter of credit;

(3) Guarantee business, including standby letter of credit business;

(4) loan commitments;

(5) financial derivative business;

(6) Custody of various investment funds;

(7) registration, subscription, subscription and redemption of various funds;

(8) agency securities business;

(9) Agency insurance business;

(10) Other types of business determined by the People's Bank of China to which the approval system applies.

Article 8 The types of intermediate business to which the filing system applies include:

(1) various exchange business;

(2) export collection and import collection;

(3) Issuing, underwriting, and redeeming government bonds as agents;

(4) Collection and payment services, including payment of wages, distribution of social security funds, and collection of utility charges (such as collection of utilities);

(5) Entrusted loan business;

(6) Acting as a loan agent for policy banks, foreign governments and international financial institutions;

(7) liquidation of agency funds;

(8) Acting for the acquiring business of other bank cards, including agency of foreign card business;

(9) Various types of agency sales business, including travel check sales;

(10) Various types of witness business, including deposit certification business;

(11) Information consulting business, mainly including credit investigation, corporate credit rating evaluation, asset evaluation business, and financial information consulting;

(12) business and personal financial advisory services;

(13) Business investment and financing consulting services, including financing consulting and international syndicated loan arrangements;

(14) Safe deposit box business;

(15) Other types of business determined by the People's Bank of China to apply the filing system.

Article 9 After the People's Bank of China accepts the application materials for commercial banks to start intermediary business, it shall issue a formal approval document for the business varieties to which the approval system is applicable within 30 working days. Regarding the business varieties to which the filing system is applicable, the supervisory department of the People's Bank of China shall reply to the applicant bank in the form of a filing notice within 15 working days after the application materials are accepted.

Article 10 When the People's Bank of China examines an application for a commercial bank to start an intermediate business, it may make special restrictions on the applicable objects and scope of commercial banks to start an intermediate business.

Article 11 Commercial banks that start intermediary businesses not listed in Articles 7 and 8 of these Provisions shall report to the People's Bank of China for review under the approval system. The People's Bank of China determines the applicable approval or filing system based on the nature of the business and risk characteristics.

Article 12 For the types of intermediate businesses that have been issued by the People's Bank of China for special business management measures, if the measures have provided corresponding approval or filing systems, the special business management measures shall be implemented.

Article 13 Newly established state-owned commercial banks and joint-stock commercial banks shall newly apply for intermediary business, and their head offices shall apply to the head office of the People s Bank of China for approval.

Before a branch of a commercial bank starts an intermediate business, it should report to the local governing bank of the People's Bank of China on the type of its business and its attributes.

Article 14 New types of intermediary business opened by city commercial banks shall be uniformly applied by the head office to the People s Bank of China branch and business management department, and shall be authorized by its head office to authorize its branches after review and approval Do business.

Before a branch of a city commercial bank starts an intermediate business, its head office should report to the local governing bank of the People's Bank of China the types and attributes of the business before it is opened.

Article 15 The types of intermediary business offered by a branch of a commercial bank shall not exceed the range of business types approved by the head office of the People's Bank of China for examination and approval.

Article 16 The head office of a commercial bank shall submit the following documents and materials (in triplicate) to apply for the establishment of business varieties that apply the approval system:

(1) Application for establishment;

(2) Feasibility study report. The report should include at least the following:

1. Definition of the types of business to be launched;

2. Risk characteristics and precautionary measures of the business to be launched;

3. Forecast of the costs and benefits of the business to be launched;

4. The management personnel and business staffing of the business types to be launched;

5. The support system of the proposed business varieties;

6. Develop and implement plans for the types of business to be launched.

(3) the rules and regulations, operating rules and related internal control systems of the business varieties to be launched;

(4) Other documents and materials required by the People's Bank of China.

Article 17 A commercial bank applying for the establishment of a business product that applies the filing system shall submit the following documents and information:

(1) Application for start-up. The application for start-up shall explain the following:

1. Definition of the types of business to be launched;

2. Forecast of the costs and benefits of the business to be launched;

3. The management personnel and business staffing of the business types to be launched;

4. Support system for the proposed business.

(2) Operating procedures and related internal control systems for applying for the establishment of business varieties;

(3) Other documents and materials required by the People's Bank of China.

Article 18 Commercial banks should strengthen communication and negotiation with their peers when conducting intermediary business, and put an end to vicious competition and unfair competition in monopoly markets.

Article 19 For intermediary businesses that have uniform national fees or pricing standards, commercial banks charge according to national uniform standards. For intermediate businesses where the country does not have uniform charging or pricing standards, the People's Bank of China authorizes the China Banking Association to determine fees or pricing standards based on the principles of commerce and fairness, and commercial banks should charge according to the standards determined by the China Banking Association.

Article 20 Commercial banks shall improve their internal operation and management mechanisms, strengthen internal controls, and ensure effective management and standardized development of intermediate businesses.

Article 21 A commercial bank shall formulate an internal authorization system for intermediate business and report it to the People's Bank of China for the record.

The internal authorization system of a commercial bank shall specify the authorization authority of the branches of the commercial bank at different levels for different types of intermediate business, and shall specify the scope of the intermediate business that the branches at all levels may engage in.

Article 22 Commercial banks shall strengthen the control and management of intermediate business risks, and shall establish and implement effective risk management systems and measures in accordance with relevant laws, regulations and regulatory rules.

Article 23 A commercial bank shall establish an information management system that monitors and reports various types of intermediate services, timely, accurately and comprehensively reflects the development and risk status of various intermediate services, and reports the business operations and the existence of the business to the regulatory authorities in a timely manner. problem.

Article 24 Commercial banks shall pay attention to the risk control and management of contingent assets or contingent liabilities in intermediary businesses, and implement unified capital management for contingent assets businesses; they shall also pay attention to position management and risks of transactional businesses Limit control; unified credit management should be implemented for contingent asset businesses with credit risk.

Article 25 A commercial bank shall establish an internal audit system for intermediate business, and conduct periodic or irregular audits on the risk status, financial status, compliance with internal rules and regulations, and legal compliance of the intermediate business.

Article 26 In the course of supervision and inspection of the bank's intermediary business, the People's Bank of China shall, in the event of any of the following circumstances, be found in accordance with the Measures for the Punishment of Financial Illegal Acts, the Administrative Measures for the Qualifications of Senior Managers of Financial Institutions and related Penalties are imposed by laws and regulations, and if the circumstances are particularly serious, related business will be compulsorily suspended and the qualifications of senior managers with direct leadership responsibilities will be cancelled.

(1) to start intermediary business without the approval or filing of the People's Bank of China;

(2) In the course of starting a business, it violates national laws and regulations and endangers national and public interests;

(3) Evading the supervision and inspection of the People's Bank of China in the process of starting a business;

(4) In the course of starting a business, there is an act of unfair competition;

(5) In the course of business operation, the operation procedures and internal control systems have not been strictly implemented, and internal control has been chaotic, causing serious risks and substantial financial losses;

(6) Other situations that the People's Bank of China determines need to be handled.

Article 27 In the course of business operations of the bank, there are other illegal and illegal acts other than Article 26 of this provisional provision, or other provisions of this provisional provision, the People's Bank of China will deal with it according to relevant laws, regulations and rules .

Article 28 The People's Bank of China is responsible for the interpretation of these regulations.

Article 29 These regulations shall be implemented as of the date of promulgation. ^[1]