The New Development Of China's Bank–Trust Company Cooperation Business And Legislation

The cooperation between banks and trust companies is growing faster in recent years. This cooperation mode dominates the financial product portfolio in terms of both number and scale, Cooperation between a bank and a trust company, usually initiated by a bank by pooling funds by means of selling financial products, refers to the fact that a bank, as a single trustee, entrusts a trust company to manage funds. By doing so, the bank can translate credit products into financial products, transfer the corresponding funds out of the balance sheet and turn capital business income into intermediate business income. This not only meets customers'financing desire but avoids the restriction on credit fund scale. As a result, a great deal of funds is out of the supervision horizon, thereby reducing the implementation effect of monetary policies and leading to abnormal development of the bank-trust company cooperation business (hereinafter"this business"). Under such conditions, the China Banking Regulatory Commission (the CBRC) issues a series of new regulations to suspend this business. After comparing this business before and after the issuing of these new regulations and analyzing the legal nature and legal relations of this business, the author has illustrated the main objectives and the restriction object of these new regulations and suggests shifting the service object from low and medium-end clients to high net worth individuals (HNWIs) so as to integrate the advantages of both sides; the author also recommend pacing up legislation to fill the legal loopholes in this business.