CBRC VOWS TIGHTER CONTROLS
New chairman determined to fend off risks and push forward with reforms
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.