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Lenders 'must meet capital standards' (2)

(China Daily)

11:19, December 08, 2012

To ease pressure on lenders that fail to meet the requirements by the end of 2012, the CBRC set different standards for each year between 2013 and 2018, allowing them to gradually catch up with the criteria.

It would also grant certain incentives to banks that meet the new standards before the deadline, said the CBRC.

Wang Zhaoxing, vice-chairman of the commission, said in November that China will not postpone the implementation of tougher capital requirements on banks that are expected to be effective from Jan 1, despite uncertainties over economic recovery and lower profit growth in the industry.

Banks would actively tap those capital instruments next year, particularly hybrid securities, after the regulators announced the new guidelines, said Hu Bin, a vice-president and senior analyst at Moody's Investors Service.

"The gap between Chinese banks and their international counterparts on Tier 1 capital adequacy will be narrowed as a result," he said.

Hybrid securities generally refer to securities combining both debt and equity characteristics, such as convertible bonds.

Hu added that the capital positions of Chinese banks would be sufficient to meet the new requirements, which are in line with the Basel II and Basel III agreements, set by the Basel Committee on Banking Supervision, a global group of central bank governors, on bank capital adequacy and liquidity.

Beijing initially planned to put the new rules into effect at the beginning of 2012.

【1】 【2】



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