Foreign banks disclose Chinese offshore listings to China
Foreign banks will submit details of Chinese companies’ offshore listings to the China Securities Regulatory Commission (CSRC) today.
The Commission proposed a rule change in which foreign banks working on offshore listings held by Chinese companies will need to submit an annual list of these activities. Fees reaped by banks in the US and Hong Kong for managing these listings were previously private information. Banking analysts are calling the move ‘unprecedented’. The CSRC hopes to increase accountability overseas for its private companies by reporting wrongdoing or malpractice to the offshore regulatory authority of the offending bank.
The fees collected for public Chinese listings by banks in the United States have been lucrative, garnering over 2 billion dollars since 2016—many banks believe this new rule will eat heavily into their profits.
Short-term, the moves will likely ease some of the regulatory uncertainty that roiled financial markets throughout 2021 by increasing the accountability of private companies based in China. However, despite the scrutiny, international banks will likely continue managing Chinese offshore activity with little interruption. CSRC’s new rule fits into a larger effort by the CCP to increase its control and surveillance of private institutions.
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