Research on the Bankruptcy Standard of Commercial Banks in China
DOI:
https://doi.org/10.53469/jssh.2024.6(09).22Keywords:
Commercial bank bankruptcy, Regulatory standard, Diversified standard systemAbstract
Crisis of commercial banks has been reported frequently, and it is normal for them to fail and quit in the market competition. In order to maintain the national financial order and prevent systemic crisis, it is of great significance to improve the legal system of commercial bank bankruptcy to deal with the problematic commercial banks in a timely manner. Commercial bank insolvency standards as the application of commercial bank insolvency legal system, scientific and reasonable commercial bank insolvency standards is the key to commercial bank insolvency legal system to play a useful role. At present, the bankruptcy of commercial banks in China applies the general corporate bankruptcy standard. Based on the special characteristics of commercial bank insolvency, the introduction of regulatory standards and the establishment of diversified commercial bank insolvency standard system can be considered.
References
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Article 134 of the Enterprise Bankruptcy Law of the People's Republic of China Where a financial institution such as a commercial bank, a securities company, an insurance company, etc., is in a situation provided for in Article 2 of this Law, the financial supervisory and regulatory authority under the State Council may make an application to the people's court for reorganization or bankruptcy and liquidation of the financial institution. Where the financial supervisory and regulatory authority under the State Council takes measures such as taking over or trusteeship of a financial institution with significant business risks in accordance with the law, it may apply to the People's Court for suspension of civil litigation proceedings or execution proceedings in which the financial institution is the defendant or the executor. Where a financial institution implements bankruptcy, the State Council may formulate implementation measures in accordance with the provisions of this Law and other relevant laws.
Wang Nan, “Research on the Legal Problems of Bankruptcy of China's Commercial Banks,” in Jurist, No. 4, 2007.
Article 71 of the Commercial Banks Law of the People's Republic of China Commercial banks are unable to pay their debts as they fall due, and with the consent of the banking supervision and administration agency of the State Council, the people's court shall declare their bankruptcy in accordance with the law. Where a commercial bank is declared bankrupt, the people's court shall organize the banking supervision and administration agency under the State Council and other relevant departments and relevant personnel to set up a liquidation group to carry out the liquidation.
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Commercial bank bankruptcy prevention procedure refers to a kind of preliminaries to prevent the commercial bank on the verge of bankruptcy from entering into bankruptcy liquidation directly. From the point of view of China's legislation, the bankruptcy prevention procedures of commercial banks include four kinds of suspension, institutional reorganization, mergers and acquisitions, and receivership, which are scattered in various laws and regulations, such as suspension and reorganization in Article 74 of Commercial Bank Law, institutional reorganization in Article 38 of Bank Supervision and Administration Law, mergers and acquisitions in Paragraph 3 of Article 68 of Commercial Bank Law, and receivership in Chapter 6 of Commercial Bank Law. etc. Li Guangji and Lai Rongzhou, “On the Improvement of Bankruptcy Prevention Procedures of Commercial Banks in China”, in Southern Finance, No. 4, 2020.
The Japanese Bankruptcy Law generalizes the insolvency standard as “the cause of deterioration of the property status shown for the purpose of making the declaration of insolvency”. “. [Japan] Ishikawa Akira, translated by He Qinhua and Zhou Guiqiu, Japan Bankruptcy Law, China Law Press, 2000 edition.
E.g., Article 267, paragraph 2 of the British Insolvency Act 1986 provides that a creditor applying for bankruptcy of a debtor shall state to the court that the following circumstances existed at that time: (1) the amount of a single item of debt, or the total amount of a number of items of debt, reaches or exceeds the level of insolvency; (2) that the item of debt, or each of the items of the several items of debt, that has a definite amount due to the applicant or one or more of the applicants, either immediately or at some future time, and is not secured by property; and (3) that the debt, or each of the debts, is one that the debtor is manifestly unable to pay, or has no reasonable hope of being able to pay .
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1 level is evaluated as low risk, which means that all aspects are almost sound; 2 level is evaluated as medium-low, which means that there are weaknesses, and if not corrected, it will cause problems if it continues to develop; 3 level is evaluated as medium, which means that there is a medium degree of dissatisfaction with the weaknesses, and it is easy to deteriorate if not corrected; 4 level is evaluated as medium-high, and it is necessary to take corrective action immediately, and there is a possibility of failure; 5 level is evaluated as medium-high, which requires immediate corrective action, and there is a likelihood of closure; a level 5 rating of second-highest, very likely to fail, and failure to take action will result in immediate closure; and a level 6 rating of high, immediate liquidation and delisting.
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