China Looks To Enrich Funds For Financial Risk Disposal

Authorities should enrich the funding sources for risk disposal of high-risk financial institutions, establish a multi-level fund guarantee mechanism and clarify the responsibilities and order of losses for different entities, 21st Century Business Herald reported citing an article by the National Financial Regulatory Administration. The newspaper noted the banking sector’s risk disposal incurred a large amount of bailout costs. The liquidation of Baoshang Bank caused CNY67.6 billion of deposit insurance funds in 2020, while Liaoyang Rural Commercial Bank drove CNY36.9 billion of costs in 2022. Out of 4,364 banking financial institutions 337 were reported in the “red zones” by Q2 2023, mainly city commercial banks and rural banks, a central bank report showed.