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China's banking regulator to revise capital adequacy rules

08-16-2011 09:25 BJT

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China is set to adopt stricter commercial bank capital management regulations, in order to better guard against risks.

In a draft regulation issued Monday, China's top banking regulator, China Banking Regulatory Commission, introduced stricter-than-international-standard measures to manage commercial bank capital. Yin Hang has the story.

On Monday, China Banking Regulatory Commission issued a draft regulation to streamline the country's commercial bank capital management.

The regulation has made vital adjustments to the commercial bank capital adequacy ratio calculation and supervision methods, in a bid to ensure risks facing by banks could be fully covered by its capital.

It's a move made in the wake of the 2008 financial crisis, after which many countries came up their own reform measures to secure a safer domestic financial system.

China is set to adopt stricter commercial bank capital management regulations.

Fan Wenzhong, Director of Int’l Department of CBRC said, "Our capital adequacy ratio is higher than the international basic requirement level. We made some adjustment on setting the new leverage rates, some of the new rates are stricter than the international ones. We also raised other requirements to ward off bad loan risks. Some of the requirements are brand-new."

The regulation, to be enforced on January 1st of 2012, maintained the country's minimum core commercial bank capital adequacy ratio at 11.5 percent, and minimum non-core commercial bank capital adequacy ratio at 10.5 percent.

Officials expect the new measures will help equip the country's commercial banks with better capability to counter risks and ward off the dangers of bad loans.

Fan said, "In the short term, the regulation will not have too much impact on banks' daily business. But in the long run, I believe it will promote the whole industry. It will internationalize the management of Chinese banks, and thus create a new mode that can achieve both risk prevention and stable development."

China's core commercial banks' adequacy ratio reached 9.92 percent as of this June.

Editor:Li Wanran |Source: CNTV.CN

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