Efforts stabilize financial institutions with excessive risk are being hindered by a slowdown, according to a provincial branch head from China’s central bank, who called for more tolerance for risk amid a pandemic.
«The epidemic has affected the work done in the past on financial risk prevention,» according to a «Reuters» report citing Xu Nuojin, head of the People’s Bank of China’s Zhengzhou branch in central Henan province. «The outstanding risks could be intensified, and the new risks are taking shape.»
China has recently been undergoing rapid and ground-shaking changes with regards to its monetary policy stance. The world’s second-largest economy said earlier this month that it would pivot towards a pro-growth policy but signals point to greater focus on qualitative objectives after Beijing said it would scrap quantitative growth targets in the latest National People’s Congress.
More Tolerance
Concerns about escalating risks in the financial system follow state-led rescues of three lenders last year – Bashing Bank, Bank of Jinzhou and Hengfeng Bank. The People’s Bank of China said over the weekend that it would extend its temporary custodianship of Inner Mongolia-based Bashing due to the coronavirus outbreak.
Existing risks and an ongoing coronavirus-fueled slowdown aside, China has also significantly shifted focus away from supporting bad loan coverage at small and mid-sized lenders to back small businesses while banks have agreed to delay loan repayments totaling $124 billion. Plans are already being drafted to restructure small and medium-sized banks through mostly «market-oriented» means.
«It’s impossible to require some of the financial institutions, already weak in health, to operate normally during the shock of epidemic,» Xu said. «We have to roll out more tolerant measures and extend the grace period appropriately when tackling risks.»
https://www.reuters.com/article/us-china-parliament-pboc-interview/chinas-efforts-to-resolve-financial-risks-slowed-by-virus-local-central-bank-head-idUSKBN230050
