March 8th, 2004

Chapter I General Provisions

Article 1 The present Measures are hereby formulated for the purpose of implementing the Banking Supervision Law of the People''s Republic of China and the Regulations of the People''s Republic of
China on the Administration of Foreign-funded Financial Institutions and other laws and regulations, for the purpose of regulating the supervision over the consolidation of financial statements and implementing effective risk supervision.

Article 2 China Banking Regulatory Commission (hereinafter referred to as CBRC) shall be responsible for the guidance over the administration of the consolidation of financial statements in foreign-funded banks.

Article 3 CBRC shall conduct supervision over the solely foreign-owned banks or joint-stock banks that have established operative branch institutions or affiliated institutions, and foreign banks that have established two or more operative branches in China through the consolidation of financial statements.
　　Through the consolidation of financial statements, CBRC can fully supervise over the worldwide operation and risk status of foreign-funded corporate institutions registered in China, the overall business and risk status of the foreign banks in China, and pay attention to the business risk and market behaviors thereof worldwide.

Article 4 The leading reporting bank as mentioned hereinafter refers
to the parent bank of the solely foreign-funded or joint-stock
banks, and institutions for reporting consolidated financial
statements and comprehensive information, which are designated by
the parent bank of a foreign bank or the regional management
departments it authorizes and are put on records at the agencies of
CBRC. The "supervision bureau of consolidated financial statements "
refers to the agency of CBRC at the place where the leading
reporting bank of a foreign-funded bank is located. And "the
territorial supervision bureau" refers to the agency of CBRC at the
place where other business branches of a foreign-funded bank are
located.
Article 5 The "year" as mentioned in the present Measures refers to
the year of the Gregorian calendar from January 1 to December 31.
The fiscal year refers to the legal fiscal year of each country.
Chapter II The Determination of the Leading Reporting Banks and
their Functions
Article 6 The foreign-funded banks that the conditions of
consolidated financial statement in conducting supervision as
prescribed in Article 3 of the present Measures shall determine a
leading reporting bank.
Article 7 Those foreign-funded corporate institutions that meet the
conditions for the supervision over the consolidation of financial
statements as a result of the establishment of additional branch
institutions or mergers shall file for a record at an agency of the
CBRC at the place where the parent bank is located within one month
after the conditions are met.
　　Where a foreign bank meets the conditions for the supervision over
the consolidation of financial statements due to the establishment
of additional institutions, its parent bank or authorized regional
management department shall assign a leading reporting bank within
one month after they have been approved officially by the CBRC. And
the leading reporting bank shall then file for a record at the
agency of CBRC at the place where it is located, and send a copy to
the relevant territorial supervision bureau.
Article 8 Where a foreign bank needs to change the leading reporting
bank, its parent bank or authorized regional management department
shall change the leading reporting bank one month before the end of
the fiscal year. The former leading reporting bank and newly
appointed one shall put this on records at the respective local
agencies of the CBRC, and send a copy to the relevant territorial
supervision bureau.
　　The newly appointed leading reporting bank shall undertake the
functions of the leading reporting bank from the next fiscal year.
Article 9 The leading reporting bank shall employ full-time or
part-time eligible managers in the China Region in light of
circumstances. The examination on the qualifications for holding
such a post shall apply the filing system for the senior management
personnel of foreign-funded financial institutions as prescribed in
the Detailed Rules for the Implementation of the Regulations of the
People''s Republic of China on the Administration of the
Foreign-funded Financial Institutions.
Article 10 The leading reporting bank is an institution for the
collection of consolidated financial statements and the
comprehensive information of a foreign-funded bank. It performs the
following functions:
1. The leading reporting bank shall submit or put on record the
supervision statements, statement and report of major matters
concerned, and other supervision materials to the supervisory
bureaus of consolidated financial statements according to the
requirements of supervision, and shall be responsible for the
truthfulness, accuracy and timeliness of the contents submitted and
filed on record.
　　The leading reporting bank shall also be responsible for
submitting the business applications concerning several branch banks
within China to the supervisory bureaus of consolidated financial
statements uniformly, and send a copy thereof to the territorial
supervisory bureaus.
2. The leading reporting bank may attend the work meeting or
proseminar convened by the CBRC on behalf of the foreign-funded bank
it is subordinated to, and propose opinions and suggestions in the
name of the foreign-funded bank. The leading reporting bank, which
attends the meeting shall report in time the information of the
meeting to the parent bank (general bank) or the regional management
departments and circulate a timely notice to other business branches
within the territory.
　　The opinions and suggestions of foreign-funded banks on relevant
Chinese supervision laws and regulations shall be submitted to the
supervisory bureaus of consolidated financial statements uniformly
by the leading reporting bank after being collected by it, After
obtaining the feedback opinions, the leading reporting bank convey
them to other business branches within China in time.
3. The leading reporting bank shall report the relevant information
in respect of economy and finance of the parent bank and home
country or region as supervision requires;
4. The leading reporting bank shall be responsible for the
information disclosure of the domestic business branches of a
foreign-funded bank.;
5. Implementing other requirements of the supervision bureau;
　　The leading reporting bank shall attach electronic documents at
the time of submitting written material.
Article 11 The person in charge of the leading reporting bank shall
be responsible for the consolidation of financial statements
undertaken by the leading reporting bank.
Chapter III Non-On-The-Spot Supervision
Article 12 The CBRC shall be responsible for guiding and supervising
over the work of its agencies in the non-on-the-spot supervision
over the consolidation of financial statements at foreign-funded
banks.
Article 13 The supervisory bureaus of consolidated financial
statements shall supervise over the quarterly reports on
consolidated financial statements from the institutions operating at
home submitted by the leading reporting bank, of which, the
financial statements from the overseas branches and subordinate
institutions of a solely foreign-funded bank or joint-stock bank and
the consolidated financial statements of a group company shall be
reported with written documents by year.
Article 14 The supervisory bureaus of consolidated financial
statements shall see to it that the leading reporting banks file for
a timely record of the following matters:
1. The annual report already publicized and the information
disclosure of the business branches operating at home for the fiscal
year.
2. The rating by external rating institutions.
3. The major news released by the parent bank.
4. The documents specifying the events under investigation.
5. Appraisal of the supervision bureau of the home country or region
and major supervision measures.
6. The statement on major adjustment of policies in respect of
finance and economy of the home country or region. And
7. Other relevant documents as prescribed in the Detailed Rules for
the Implementation of the Regulations of the People''s Republic of
China on the Administration of Foreign-funded Financial Institutions
Article 15 The consolidated financial statement supervision bureaus
shall require the leading reporting bank to submit one copy of the
Summary Report of the Business Conditions of Foreign Funded Banks
half a year, which shall include basic information (the number of
operative institutions, number of employees, alteration of the
business scope, etc.), the specification on centralization of loan
granting, analysis on reserves for losses of loans, the transfer of
large amount of assets, analysis on flowing in or out of capitals,
connected transaction, listing of overseas loans or investment, and
the trends in operation of the business branches, and other
contents. There are also statements on alteration of the structure,
business strategies, level of capital adequacy, financial status and
market credit standing of the parent banks.
Article 16 The consolidated financial statement supervision bureaus
shall be responsible for monitoring the indicators for eligible
supervision over the examination through consolidated financial
statement on a quarterly basis, and make analysis on the trend of
risk supervision indicators and overall business behaviors.
Article 17 The consolidated financial statement supervision bureaus
shall collect the business management systems of foreign-funded
banks, and communicate with the leading reporting bank or senior
management personnel of regional management departments on contents
of risk management of foreign-funded banks such as the pattern of
management, management information system, risk and authorization
management, compliance management, credit management and financial
management, etc..
Article 18 The consolidated financial statement supervision bureaus
shall submit the following matters concerned to the CBRC according
to relevant provisions:
1. The major events concerned and various management systems that
have been put on records by foreign-funded banks.
2. The errors in the reports of the data about consolidated
financial statements.
3. The regulation violation and abnormal alteration of the indexes
for examination through consolidated financial statement. And
4. Attitude toward supervision over consolidated financial
statements.
Article 19 The consolidated financial statement supervision bureaus
shall, on the basis of comprehensive analysis of various supervision
information and on-the-spot examination, complete the half-year and
annual supervision reports on consolidated financial statements
Article 20 The CBRC shall be responsible for communicating with the
supervision authorities of the home country or region of the
foreign-funded corporate institutions and the supervision
authorities of the home country or region of a foreign bank on
issues of supervision they commonly concern, and carry out
cooperation on supervision information exchange.
Article 21 The CBRC shall be responsible for promoting the exchange
and share of the comprehensive supervision information within their
organs, and provide or disclose the business conditions of the
foreign-funded banks within China.
Article 22 The CBRC shall be responsible for unifying the procedures
and requirements for the supervision over the consolidation of
financial statements.
Chapter IV On-the-spot Examination
Article 23 The CBRC shall be responsible for organizing, guiding and
coordinating the on-the-spot examination of consolidated financial
statements at foreign-funded banks.
Article 24 There shall be two ways for organizing on-the-spot
examination through consolidated financial statements:
1. Entrusting the consolidated financial statement supervision
bureaus and the territorial supervision bureaus to assign
examination groups, and carrying out on-the-spot examination through
consolidated financial statements respectively according to
examination plans. And
2. The CBRC shall organize the supervisors of foreign-funded banks
to form an examination group to carry out on-the-spot examination
through consolidated financial statement on the consolidated
financial statement institutions.
Article 25 The CBRC shall, according to the conditions of risk
supervision and periods of on-the-spot examination, determine plans
of on-the-spot examination of consolidated financial statement at
foreign-funded banks, and put forward guiding requirements for the
form, contents and emphasis of the examination.
Article 26 The CBRC shall adjust the contents of consolidated
financial statement for on-the-spot examination in light of
realities, and coordinate the time and progress of the examination
items. In case the examination group finds any major problem in the
examination, it shall report to the CBRC in time.
Article 27 The CBRC shall uniformly formulate plans of consolidated
financial statement for on-the-spot examination organized by it. The
examination group shall carry out on-the-spot examination in light
of the procedures and requirements as prescribed in the examination
handbook and plan, and complete the examination task within the
prescribed time limit.
　　After ending the on-the-spot task, the examination group shall
finish the "Examination Facts and Appraisal" and relevant ratings of
CAMELs/ROCA, and make a final confirmation on the facts concerned
with the senior management of the examined institution. After the
end of the examination, the examination team shall transfer the
"Examination Facts and Appraisal" and the result of the grading of
CAMELs/ROCA and the examination files to the agency of the CBRC at
their locality.
　　Upon completion of all the examination plans, the examination
group shall collect the report of consolidated financial statement
for on-the-spot examination, and report it to the CBRC together with
the "Examination Facts and Appraisal" and the ratings of a single
institution.
Article 28 The supervision opinions on consolidated financial
statement for on-the-spot examination shall be coordinated uniformly
by the CSRC, who shall then propose suggestions according to the
"Examination Facts and Appraisal" and reflect to the corresponding
agencies of the CBRC.
Article 29 The agencies of the CBRC shall be responsible for
following up and handling the consolidated financial statement for
on-the-spot examination.
　　The agencies of the CBRC shall, according to the "Examination
Facts and Appraisal" and the suggestions of the CBRC, issue opinions
on the consolidated financial statement for on-the-spot examination
to the institutions at their locality, require them to rectify and
correct, and impose punishment on acts in violation of regulations
according to relevant provisions.
　　The agencies of the CBRC shall, within 3 months after the
on-the-spot examination through consolidated financial statement,
follow up the implementation of the measures for rectification, or
make follow-up on-the-spot examination on the consolidated financial
statement institutions at their locality, and report the
rectification and correction to CBRC in time.
Article 30 The CBRC shall be responsible for accepting the
application of the supervision bureau of the home country or region
of a foreign bank for the transnational on-the-spot examination, and
entrust the local agencies of the CBRC and the examination team to
exchange opinions on the supervision over the examined institution.
　　After the end of the contact, the agencies of the CBRC shall
report the information they have acquired to the CBRC in time, and
follow up the issues referred to by the examination team.
Chapter V External Audit and Three Party Talks
Article 31 Where a foreign-funded bank conforms to the conditions
for consolidated financial statement supervision, it shall engage
the same accountant office in principle to be responsible for
auditing and consolidated financial statement auditing on domestic
business branches and affiliated institutions.
Article 32 The leading reporting bank shall, one month before the
end of the fiscal year, put on records the external auditors and
auditing group they engage in the current fiscal year at the
consolidated financial statement supervision bureau, and send a copy
to the corresponding territorial supervision bureau at the same
time. In case of changing accountant office, the leading reporting
bank shall also submit statement in writing.
　　In case the agencies of the CBRC have negative opinions on
auditing quality made by the external auditors, who are engaged by
the foreign-funded banks, they may make a suggestion to the
foreign-funded banks and ask it to change the auditing team or
accountant office within 14 working days after receiving the letter
of recording.
Article 33 The external auditors shall communicate with the
consolidated financial statement supervision bureau on the auditing
requirements before conducting the consolidated financial statement
auditing.
Article 34 The leading reporting banks shall, within 5 months after
the end of the fiscal year, report the "Auditing Report for
Consolidated Financial Statement" and the "Letter of Suggestion on
Management through Consolidated Financial Statement" to the
consolidated financial statement supervision bureaus.
Article 35 The territorial supervision bureaus shall, within 30 days
after receiving the External Auditing Report and the Letter of
Suggestion on Management, reflect the opinions of appraisal on
quality of external auditing to the consolidated financial statement
supervision bureau.
　　The consolidated financial statement supervision bureaus shall be
responsible for making comprehensive appraisal on quality of
external auditing through combination of the feedback opinions of
each territorial supervision bureau, and issues reflected in the
Auditing Report for Consolidated Financial Statement and the Letter
of Suggestion on Management through Consolidated Financial
Statement.
Article 36 The consolidated financial statement supervision bureaus
shall, on the basis of comprehensive supervision of foreign-funded
banks, be responsible for proposing plans for three -party talks.
　　The three-party talks on consolidated financial statement shall be
organized by the CBRC, and the participating parties shall include
the CBRC, the consolidated financial statement supervision bureau,
the territorial supervision bureau, external auditors and the
leading reporting banks. After the end of the talks, the
consolidated financial statement supervision bureaus shall complete
the summary of three parties meeting for the consolidated financial
statement, and supervise over the leading reporting bank for its timely feedback of the implementation of the opinions for rectification and correction.

Chapter VI Supplementary Provisions

Article 37 The present Measures shall be interpreted by the CBRC.

Article 38 The relevant opinions on consolidated financial statement in conducting supervision shall be considered as the basis for examination of such applications as the establishment of additional
institutions of a foreign-funded bank and business access, etc..

Article 39 The present Measures shall come into force as of April 1, 2004. Where other relevant provisions concerning the supervision over consolidated financial statement at foreign-funded banks conflict with the present Measures, the former will be invalidated simultaneously.