3. The Access of Banking Institutions and their Executives to the PFTZ. The post-establishment reporting system shall apply to the access of banking institutions below the branch level (branches not included) and their executives to the PFTZ. Details are listed in Annex 3: Detailed Rules on the Simplification of the Access of Banking Institutions and their Executives to the China (Shanghai) Pilot Free Trade Zone (Interim).

4. Risk Control of Banking Institutions and Business in the PFTZ. CBRC Shanghai Bureau shall ensure the effective risk control of the banking business in the PFTZ by emphasizing the concept of legal-person-led risk control and the consolidated risk management. Meanwhile, it shall enhance the routine on-site inspection and off-site supervision, focusing on counterparty credit risk, compliance risk, operation risk and financial consumer protection. It shall strengthen the supervision of staff behavior and prevent major risks.

V. Functional Layout of and Resource Support for Banking Business in the PFTZ

Launching business in the PFTZ by banking institutions is a strategically required development of cross-border financial services and progress in financial innovation. It also provides an opportunity for banking institutions to accumulate replicable experience in the operation and management of banking business. To this end, banking institutions shall optimize their financial services to meet the clients’ demand of coordinating their business inside and outside of the PFTZ as well as their domestic and overseas business. They shall also develop strategies for sound operation and innovative development.

1. Banking institutions in Shanghai shall differentiate the function and focus of their PFTZ-based branches and other branches outside the PFTZ in dealing with the PFTZ-related business, and develop an innovative development model with unique features for such business, so as to effectively support the real economy in the PFTZ.

2. Shanghai banking institutions dealing with the PFTZ-related business shall actively seek support from their head offices or headquarters for exploration and innovation in their PFTZ-related business. The support shall include but not limited to:
(1) Adjusting performance assessment indicators for PFTZ-based branches; 
(2) Not setting separate loan-to-deposit ratio for such branches in their initial period of operation; 
(3) Establishing independent system of liquidity risk management and offering necessary financial support for those accounts that balance the liquidity by itself; 
(4) Delegating more authority to corresponding supervisory institutions in charge of the PFTZ-related business while implementing the unified management policies of the headquarters, conducting capital transaction business independently on the condition that risks are controllable and squaring positions independently in the PFTZ or on the overseas markets; and
(5) Coordinating the operation of the branches inside and outside of the PFTZ as well as domestic and overseas branches concerning their PFTZ-related business, enhancing resource sharing and jointly supporting the innovative development and risk management of the PFTZ-related business.