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China improves commercial bank capital and risk management

BEIJING (Reuters) – China’s banking regulator and central bank plan to adopt a more differentiated regulatory system to assess commercial banks’ capital adequacy ratios and risk management to better guard against risks in China’s financial system.

The China Banking and Insurance Regulatory Commission and the People’s Bank of China jointly released revised draft rules on Saturday, which they said are aimed at helping banks “continuously improve the accuracy of risk measurement and guide banks to better serve entities.” economy.”

Draft rules to bring the banking industry closer to global standards would divide lenders into three groups based on business size and risk level.

The rules will implement a differentiated regulatory system for banks. Lenders with larger assets or cross-border operations will face stricter capital requirements and need to disclose more information to regulators.

In addition, the rules will include more specific factors to measure a bank’s exposure to mortgages, such as property type, repayment source and loan-to-value ratio.

China’s property market, once a mainstay of growth, has slowed sharply over the past year, weighed down by weak demand and rising developer defaults on debt.

The capital adequacy ratio of the banking industry will remain basically unchanged after the implementation of the new rules, but some banks will see slight changes in their capital adequacy ratio, according to two regulators .

The SFC and the central bank are seeking public comments before implementing the changes on January 1 .



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