Research On The Legal System Of Commercial Bank Subordinated Debt In China

Since subordinated debt was developed in the U.S. at the beginning of20th Century, subordinated debt has received recognition and favor in the international banking gradually as a tool of supply capitals, and also is greatly demanded in China. In the year of2003, the ’Notice on Subordinated Term Debts Reckoned In Supplementary Capital(Abolished)’[2003]No.25issued by CBRC have established the Commercial Bank Subordinated Debt which is a new thing in China, and have broken a new way for commercial banks to supply capitals through issuing subordinated debt. Later, the ’Rules on the Issuance of Subordinated Bonds by Commercial Banks’, the’Notice on the Improvement of Capital Replenishment Mechanism by Commercial Banks’, the ’Regulation Governing Capital of Commercial Banks’ and some other legal documents promulgated in succession. They have made very important functions to establish and standard the market of subordinated debt. Compared with other foreign developed countries, the time for practice and legislation in subordinated debt in China is still relatively short, so the legal environment is not perfect and there are many legal problems. Issuing subordinated debt has helped the commercial banks to supply capital and adjust capital structure conveniently, effectively and flexibly, but it also cause a lot of legal issues and hidden danger in the actual operation. At the same time, study of the legal system on subordinated debts is relative shortage, which leads to the important theoretical significance and the urgent practical significance of researching on the legal system in subordinated debts by commercial banks. This paper takes the legal system of commercial bank subordinated debt in China as the object of study which divided into four parts.Part1introduces the basic theory of commercial bank subordinated debt, including the concept, legal features and functions.Part2states the law system of commercial bank subordinated debt in U.S., Britain, France and Germany by the comparative method, as to put out some improvement suggestions in Part4.Part3analyses the issues exists in the legal system of commercial bank subordinated debt according to the current legal provisions of commercial bank subordinated debt in China, including the legal effect of commercial bank subordinated debt, issues to Contract Law and Bankruptcy Law brought by the characteristic of subordinated debt, and the problems existing in the current supervising system of commercial bank subordinated debt.Part4gives out suggestions on improving the supervising system of commercial bank subordinated debt in the light of the issues putting forward in the upper part. First, make special legislation on commercial bank subordinated debt, or regulate it in the other basic laws. Second, in the field of ’Contract Law’, identify and establish perfect Altruism Contract System and make restrictions on the right of offset owned by creditor and obligor through the way of regulating additional conditions. In the field of ’Bankruptcy Law’, bring Trust Mechanism, recognize the agreement which excludes the right of set-off owned by creditor, and give creditors relevant rights in the process of bankruptcy. Third, improve the supervision specification on the commercial bank subordinated debt in China through the way of improving the distribution mechanism, strict mutual-holding system of commercial bank subordinated debt in China, and improving information disclosure system on commercial bank subordinated debt in China.