SHANGHAI (Reuters) - China’s banking and insurance regulator has issued detailed rules to regulate insurance investments in trust products, two sources with the knowledge of the matter told Reuters on Friday, part of a campaign to fend off financial risks.
In a notice issued last week and seen by Reuters, the regulator set a ceiling for the amount of money insurers can put in single collective trust products and banned them from using such investments to bypass regulations for other purposes.
The rules have also opened a door for insurance companies to do business with more of the 68 trust companies in the country, one of the sources said. Previously, insurance companies could only cooperate with roughly 20 qualified trusts firms due to penalty records and net asset requirements, according to data compiled by Reuters.
The regulator will require trust companies to arrange third-party credit enhancement to collective trust products that have non-standard assets as underlying assets, according to the document.
China Banking and Insurance Regulatory Commission (CBIRC), who signed off the document on June 19, did not immediately respond to a fax request by Reuters seeking comment.
Reporting by Zheng Li in SHANGHAI; Writing by Shu Zhang in SINGAPORE, Cheng Leng and Ryan Woo in BEIJING; Editing by Edmund Blair and Elaine Hardcastle