MNI Press Digest Jan 28: Regional Banks, SOE Reform, Liquidity

The following lists highlights from Chinese press reports on Thursday:

China's Liaoning province will merge 12 city commercial banks into a provincial-level bank to ensure sufficient capital and better governance, according to a statement posted on the central bank website. The provincial government will take the lead in the overall reform and introduce the new bank to the Liaoning Financial Holdings Group and other large strategic investors, the statement said.

China will strive to complete more than 70% of its three-year plan for reforming state-owned companies by the end of the year, according to a government statement following a meeting chaired by Vice Premier Liu He. SOEs should focus on improving efficiency, strengthen their innovation incentives so they can play a leading role in achieving technological self-reliance, as well as reduce corporate management levels and tighten supervision and shareholder responsibilities, the statement read.

The PBOC may inject liquidity through the contingent reserve arrangement (CRA) and the temporary liquidity facility (TLF) to curb surging funding rates before the Lunar New Year, China Securities Journal reported citing Yang Yewei from Guosheng Securities. China's funding rates have risen sharply on tight liquidity after net fund drains by the PBOC in the past week, the newspaper wrote. The PBOC may hope to avoid excessive rises in asset prices through controlling liquidity, the newspaper reported citing analysts. The PBOC might also see decreasing cash demand after policies halting the annual holiday migration due to pandemic control, the newspaper said.

The China Banking and Insurance Regulatory Commission aims to improve its regulation of high-risk agencies as a way of supporting China's development, the regulator said after its annual work meeting on Wednesday. The CBIRC will curb monopolies and unguided capital expansion by fintech companies, while also strengthening supervision over shadow banking, the statement stressed. The CBIRC will accelerate the disposal of non-performing assets and strictly regulate high-risk institutions to stabilize the macro leverage ratio, the statement said.