European Union Chamber of Commerce in China
Banking & Securities Working Group (Beijing & Shanghai)
Working Group Meeting
Date: Tuesday, 28th May 2013, starting at 14:00
Location:
European Chamber offices Beijing (C411A, Beijing Lufthansa Center, 50 Liangmaqiao Road, Chaoyang District)
European Chamber offices Shanghai (Unit 2204, Shui On Plaza, 333 Huai Hai Zhong Lu, near Madang Lu)
Dear Working Group Member,
We are delighted to invite you to the next Banking & Securities Working Group meeting, to be held on Tuesday, 28th May, starting at 2:00PM at the European Chamber office.
At this meeting we will discuss and decide the actions that the Banking & Securities Working Group should take regarding the new SAFE key regulatory change that links minimum net open position (NOP) limits for banks with their foreign currency loan-to-deposit ratios that will enter into force from 10th June 2013.
The new net open position limits apply to banks whose foreign-currency loan-to-deposit ratio (LDR) exceeds the reference benchmark rate of 75% for Chinese banks and 100% for foreign banks.
Minimum NOP =[(FX Lending Position – (FX Deposits * Benchmark FX LDR)*Adjustment Coefficient]
where Adjustment Coefficient = 25%
The higher a bank’s foreign currency LDR, the more tightly its long RMB positions will be restricted when the new position limits take effect. This should make foreign currency loans more expensive, as the rules incentivise banks to set aside more foreign currency deposits against their loans. Onshore foreign currency deposit rates may also rise, as banks try to attract more deposits.
Most foreign banks have foreign currency lending books, especially new ones without RMB license. This regulation has been implemented for different reasons but it creates a lot of problems for banks not running an active foreign currency trading in China.
If you or the relevant person of your organization would like to attend this meeting , please register with Ms. Ada He at ahe@europeanchamber.com.cn indicating whether you will be attending in Beijing or Shanghai before COB Monday, 27th May 2013.
Tentative Agenda
- Discussion new SAFE key regulatory change that links minimum net open position (NOP) limits
- AOB
As always, we welcome your suggestions for possible agenda topics and speakers for this and future meetings.
For more information on the Banking & Securities Working Group, or the European Chamber in general, please don’t hesitate to contact Xavier Sans Powell in Beijing, xsanspowell@europeanchamber.com.cn or Ioana Kraft in Shanghai, ikraft@europeanchamber.com.cn
