TOUGHER capital rules could be required for China s biggest lenders that were systemically important, the head of the banking regulator was quoted by China Securities Journal as saying yesterday.
Higher capital adequacy ratio targets for big banks were also required to build up counter-cyclical capital buffers in the banking system, said Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC).
The CBRC was currently studying new regulations for financial institutions that were considered too big to fail, said Liu.
The next step was to enhance precaution measures to prevent financial institutions from employing business structures that were overly complicated and to reduce the risk of moral hazard in the system, he was quoted as saying by the Securities Journal.
Liu said tougher new international banking regulations embedded in the so-called Basel III agreement would add more pressure on Chinese lenders and could eventually lead to slower lending growth over the longer term. Earlier this year, the CBRC raised capital adequacy requirements for commercial banks after a 2009 lending spree dented their balance sheets.
Under the new targets, top lenders such as Industrial & Commercial Bank of China and China Construction Bank are required to meet a minimum capital ratio of 11.5 percent while small and mid-sized banks must meet a minimum ratio of 10 percent.
Chinese lenders tapped investors for tens of billions of dollars earlier this year to replenish their capital bases. Most banks have said they would not be required to raise fresh capital for the next two to three years after the latest round of fund-raisings. All of China s top-five banks were estimated to have a capital adequacy ratio of more than 12 percent by the end of 2010, according to Citigroup analysts.
Bank of China, the country s fourth biggest bank, said earlier this month it expected to have a capital adequacy ratio of at least 12 percent after its 60 billion yuan (US$9.06 billion) rights issues in Hong Kong and Shanghai.
(SD-Agencies)
