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Free AccessMNI: China Banking Watchdog Warns Over Credit Risks
BEIJING (MNI) - China's financial system still suffers from risks that
could occur frequently, including the possible return of non-performing loans
and a large shadow banking stock, so risk prevention remains the top priority in
2018 for the authorities, the China Banking Regulatory Commission, the regulator
of the banking sector said Friday in a briefing.
"The CBRC will focus on lowering corporate debt ratios, curbing household
leverage, squeezing interbank transaction, controlling property bubbles and
regulating illegal debt of local governments in a bid to resolve risks while
maintain the economic stability," Xiao Yuanqi, chief of the Prudential
Regulation Bureau of the China Banking Regulatory Commission, told reporters.
There is a long way to go for China to further optimize its credit
structure, particularly as credit demand continues to rise. According to the
CBRC, new banking loans totalled CNY2.6 trillion in January, increasing CNY325.5
billion from the same period last year.
"A large amount of credit resources are still stuck in sectors with over
capacities and some excessively concentrated in big and medium-sized companies,
which have dragged down the quality of credit assets," Xiao warned, "The
unperfected credit law system and local protectionism in some regions have
jeopardized the risk control campaign."
The CBRC has stepped up risk prevention since last year through enhanced
inspection, targeting interbank transactions, wealth management products and
off-balance-sheet businesses. According to the CBRC, special purpose vehicle
investments saw the first reduction in January, falling 39.2 percentage points
from last January. Outstanding WMP totalled CNY30.6 trillion in January,
dropping 26.6 percentage points from last January. The outstanding trust loans
reduced CNY40.8 billion as of the end of 2017, the first monthly fall since
August 2016.
"The 180% provision coverage ratio and 13.65% capital adequacy ratio, which
total about CNY21 trillion, will provide ammunition of Chinese banking sector to
resist risk, " Xiao stressed.
The CBRC will continue to push forward debt-to-equity swaps in order to
deal with NPLs, the regulator noted, adding the five big state-own banks -- Bank
of China, Industrial and Commercial Bank of China, Agricultural Bank of China,
China Construction Bank and Bank of Communications -- have all set up their
affiliate debt-to-equity swap companies by the end of 2017.
"The regulator will insist in four 'W' in the process of risk prevention --
which are risks, where are risks, why risks happen and what are the policies and
measures," Xiao concluded.
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.