China tightens rules on financial holding companies
BEIJING, Oct 12 (Reuters) - China applied tighter rules on Monday to the country's two nationwide financial holding companies, China CITIC Group and China Everbright Group.
The regulations, issued by the Ministry of Finance on its website, www.mof.gov.cn, require the two companies to keep their debt-to-asset ratio below 60 percent.
They must seek approval for any investment that exceeds 5 percent of their net asset value and must retain any controlling stakes they own in key industrial sectors.
Officials from the companies were not available to comment.
The ministry said the two companies should take a cautious approach when trading derivatives in order to minimise risk.
It was the second warning made in a day by the government about the risks posed by derivatives.
The State-owned Asset Supervision and Administration Commission (SASAC) said earlier that it did not want state firms under its control to speculate in derivatives in 2010.
SASAC has put pressure on state firms after several, including Air China and China Eastern, reported huge derivatives losses as the global financial crisis mounted. [ID:nPEK219244] (Reporting by Aileen Wang and Alan Wheatley)
