Banking

China to tighten risk of city commercial banks: report

(Agencies)
Updated: 2009-11-06 16:56

China's banking regulatory body has asked city commercial banks, among the biggest issuers of loans in recent months, to further control credit risks, the China Securities Journal said on Friday.

The China Banking Regulatory Commission (CBRC) will place restrictions on market access and forbid further risk asset expansion of banks that have provision coverage ratio of less than 130 percent and an asset adequacy ratio lower than 10 percent, the paper quoted sources familiar with the situation as saying.

In September, new loans handed out by city commercial banks accounted for 15.5 percent of the total of 516.7 billion yuan ($75.7 billion), the paper cited data from the central bank.

Meanwhile, loans from the big four State-owned commercial banks fell to 24 percent of total loans, compared with the usual 50 percent level, the paper said.

CBRC head Liu Mingkang said last week that city commercial banks should not blindly pursue credit growth, but should instead aim for stable asset returns.

Strong bank lending has been a key factor underlying China's quick economic recovery but various government officials have raised concerns this would lead to a rise in bad debt. After an unprecedented surge in bank lending in the first half of the year, Chinese banks have slowed their pace in the second half.

Bank of Ningbo, Bank of Beijing and Bank of Nanjing are the only three listed city commercial banks.