THE central bank has started seeking internal feedback on draft rules regulating financial holding companies, targeting big-name conglomerates that hold multiple financial licenses, said two sources with direct knowledge of the matter.

Financial holding conglomerates subject to the rules will not only face new requirements on capital adequacy, but may also be forced to restructure and put part of their non-financial assets in a separate entity, the sources said Monday.

To separate risk, the draft rules seek the creation of “firewall” between different units in one financial holding firm, they said.

Presently China does not have any specific rules regulating financial holding companies. The new regulations being drafted by the People’s Bank of China will be a major step toward curbing systemic financial risks.

They would also significantly increase compliance costs for financial holding conglomerates, some of which are strongly pushing back against the move during the consultation period, which is not open to the public, the sources said.

Policymakers have previously warned about the opaque crossholding structures and “barbaric expansion” of financial holding companies, saying the control of multiple financial institutions by conglomerates and their ability to conduct business across different sectors could pose wider systemic risks.

The central bank, in its 2018 financial stability report released in November, named a few financial holding conglomerates on its watch, including HNA Group, Fosun International, China Evergrande, Ant Financial Services, Tencent Holdings and JD.com.(SD-Agencies)