China's banking regulator said that risks at small and mid-sized banks are manageable, after the government took over the troubled regional lender late last month.
The China Banking and Insurance Regulatory Commission (CBIRC) on Sunday said that risks at small and mid-sized banks are manageable, according to the central bank's publication. Investors see the publication as the latest move to soothe investors’ concerns after the CBIRC took control of Inner Mongolia’s Baoshang Bank on May 24 due to serious credit risks. The move had shaken up Chinese markets and prompted the People’s Bank of China (PBOC) to inject cash into the banking system.
«At present, small and mid-sized banks are operating smoothly, liquidity is relatively ample, and overall risks are fully manageable,» the CBIRC said in an interview with the Financial News, a publication run by the central bank. Since the takeover, the bank's business operations have been running as usual, while liquidity has been generally ample, the CBIRC said.
Targeted Support For Small Lenders
In a separate statement on Sunday, the PBOC said it will provide targeted liquidity support for small and mid-sized banks, following a meeting that discusses the stability of the interbank business. To safeguard the stability of the financial markets, the CBIRC in the interview added that big banks are willing to continue interbank business with small banks, some of whom are heavily dependent on short-term borrowing from the interbank market.
China's banking regulator last week has told the nation's major lenders to accelerate the recognition of nonperforming loans, as officials seek to improve the quality of loan books. One policy includes informing banks with nationwide operations that they must classify corporate loans overdue for more than 60 days as «nonperforming», rather than 90 days previously, according to «Bloomberg» (behind paywall) quoting people familiar with the matter.
