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China regulator to curb use of proxies to hide true ownership of banks

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China regulator to curb use of proxies to hide true ownership of banks

China's banking regulator is planning to introduce rules to clamp down on the use of shell companies and proxies to hide the true ownership of Chinese banks and other companies, Financial Times reported Dec. 1, citing a China Banking Regulatory Commission spokesman at a same-day press briefing.

Suspicions that senior Chinese government officials or their families have used proxies to hide their shareholdings in large companies have escalated in 2017, the FT said, noting that there has also been speculation about the true ownership of Anbang Insurance Group, the parent of Anbang Life Insurance Co. Ltd.

Media reports have said Anbang Insurance Group has been forced to cut its shareholdings in two Chinese banks, China Minsheng Banking Corp. Ltd. and China Merchants Bank Co. Ltd. The company has denied the reports, though analysts told S&P Global Market Intelligence that the divestment of bank stakes is inevitable.

Meanwhile, the CBRC will also move to issue new rules on microloans to curb the rapid growth of the microlending sector, Reuters reported Dec. 1.

Financial institutions must be licensed for cash lending, according to Feng Yan, vice chief of the CBRC's financial inclusion affairs department.

A Chinese government body told provincial governments to suspend regulatory approval for the establishment of new online microlenders, in order to curb risks in the online finance sector, Reuters reported in November.