(China Alert): FMC subsidiaries: From extreme to base case
-Official draft guidelines for subsidiaries are stricter than before
-Regulators are making an example out of shadow banking
-Foreign partners will almost certainly face even higher capital calls
Update: The official draft guidelines for FMC subsidiaries have now been released. Although structurally similar to the earlier reported draft, the official version is stricter across the board. Z-Ben Advisors believes that this is part of a coordinated regulatory effort to curtail shadow banking in China’s financial industry. Subsidiaries that violate these rules won’t be the only ones in the firing line: the regulator has made it clear that the parent FMCs could face ramifications.
The reported draft earlier this year was already considered by many in the industry as stern but the official draft version has gone even further. Following …
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