Chinese banks urged to lend at reasonable pace
Fri, Oct 16, 2009
AFP
BEIJING, China - China urged banks on Friday to lend at a "reasonable" pace and strengthen risk controls amid concern that brisk recent loan activity could result in asset bubbles and a slew of bad loans.
"Facing the still-grave domestic and foreign financial environment, large banks should hold on to a ... reasonable lending pace and further strengthen credit risk control," the China Banking Regulatory Commission said.
Among other measures, banks must raise their loan-loss provisions to at least 150 percent of their bad loans by the end of the year, the banking regulator said in a statement posted on its website.
Such provisions at China's commercial banks stood at 134.3 percent at the end of June, the commission's latest data showed.
Lenders must also ensure their capital adequacy ratios - which have been set at a minimum eight percent - do not fall, according to the statement.
New loans granted in the first nine months of the year by all financial institutions hit a record 8.67 trillion yuan (1.3 trillion dollars) as banks responded to Beijing's calls to help ward off the effects of the global downturn.
The figure was 5.19 trillion yuan more than in the same period in 2008.
The lending spree has fuelled concerns that money was being funnelled into stock and property investments instead of the real economy, raising the risk of asset bubbles and bad loans.
Worries had been growing that Beijing was looking to begin restricting lending.
But economists have said authorities were unlikely to rush into tightening credit conditions before the end of 2009.
Fri, Oct 16, 2009
AFP
BEIJING, China - China urged banks on Friday to lend at a "reasonable" pace and strengthen risk controls amid concern that brisk recent loan activity could result in asset bubbles and a slew of bad loans.
"Facing the still-grave domestic and foreign financial environment, large banks should hold on to a ... reasonable lending pace and further strengthen credit risk control," the China Banking Regulatory Commission said.
Among other measures, banks must raise their loan-loss provisions to at least 150 percent of their bad loans by the end of the year, the banking regulator said in a statement posted on its website.
Such provisions at China's commercial banks stood at 134.3 percent at the end of June, the commission's latest data showed.
Lenders must also ensure their capital adequacy ratios - which have been set at a minimum eight percent - do not fall, according to the statement.
New loans granted in the first nine months of the year by all financial institutions hit a record 8.67 trillion yuan (1.3 trillion dollars) as banks responded to Beijing's calls to help ward off the effects of the global downturn.
The figure was 5.19 trillion yuan more than in the same period in 2008.
The lending spree has fuelled concerns that money was being funnelled into stock and property investments instead of the real economy, raising the risk of asset bubbles and bad loans.
Worries had been growing that Beijing was looking to begin restricting lending.
But economists have said authorities were unlikely to rush into tightening credit conditions before the end of 2009.
