New chair­man de­ter­mined to fend off risks and push for­ward with re­forms

New Straits Times - - Business -

CHINA’S newly ap­pointed bank­ing reg­u­la­tor vowed yes­ter­day to strengthen su­per­vi­sion of the lend­ing sec­tor, un­der­scor­ing Bei­jing’s de­ter­mi­na­tion to fend off fi­nan­cial risks and push for­ward with re­forms this year.

Guo Shuqing, mak­ing his first pub­lic ap­pear­ance as chair­man of the China Bank­ing Reg­u­la­tory Com­mis­sion (CBRC), said he was de­ter­mined to re­move “chaos” from the reg­u­la­tory sys­tem and “safe­guard” the health of “the coun­try and the peo­ple”.

“Dif­fer­ent reg­u­la­tors, dif­fer­ent laws, dif­fer­ent rules have caused some chaos,” said Guo.

His com­ments fol­low re­marks by Pres­i­dent Xi Jin­ping on Tues­day, who told top pol­i­cy­mak­ers that the na­tion must “unswerv­ingly” crack­down on fi­nan­cial ir­reg­u­lar­i­ties and il­le­gal be­hav­iour, while im­prov­ing its mar­ket su­per­vi­sion.

Risk pre­ven­tion is ex­pected to be a key theme at a meet­ing of China’s par­lia­ment start­ing on Sun­day, af­ter years of debt-fu­elled stim­u­lus led to an explosive growth in debt.

China’s reg­u­la­tors were work­ing on new rules to re­duce risks in the boom­ing as­set man­age­ment in­dus­try, he added.

Guo said he would tighten su­per­vi­sion of banks’ wealth man­age­ment prod­ucts and curb the ex­pan­sion of banks’ off-bal­ance sheet busi­ness.

Chi­nese in­vestors, lured by high yields and ex­pec­ta­tions of im­plicit guar­an­tees by the banks or other fi­nan­cial in­sti­tu­tions, have poured tril­lions of yuan into lightly reg­u­lated wealth man­age­ment prod­ucts, the big­gest com­po­nent of so­called “shadow bank­ing” in China.

The value of banks’ out­stand­ing wealth man­age­ment prod­ucts is close to 30 tril­lion yuan (RM19.40 tril­lion), ac­cord­ing to CBRC es­ti­mates.

Guo also warned that banks needed to “pru­dently” man­age loans to prop­erty de­vel­op­ers and mort­gage lend­ing. The lever­age ra­tio of mort­gage loans was not too high, but rapid mort­gage growth was a con­cern, he added.

The CBRC will re­strict lend­ing that it suspects is be­ing used for prop­erty mar­ket spec­u­la­tion.

Prices of new houses jumped 12.4 per cent last year, the fastest rate since 2011, prompt­ing more than 20 cities to in­tro­duce prop­erty curbs to cool the mar­ket since Oc­to­ber.

China’s bank­ing as­sets over the last five years have more than dou­bled, even as the econ­omy has slowed, help­ing to push the vol­ume of non-per­form­ing loans at com­mer­cial banks to 1.51 tril­lion yuan by the end of last year, the high­est since 2005.

Guo Shuqing

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