Banking Wtchdog Pledges Strengthened Supervision

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Last updated at: (Beijing Time) Friday, May 30, 2003

Banking Wtchdog Pledges Strengthened Supervision

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Liu Mingkang, the newly-elected chairman of China Banking Regulatory Commission (CBRC), pledged the CBRC would strengthen its role as the banking supervisor and push forward reforms of China's banking sector.

The reform process would be comprehensive and the CBRC would serve as a strict supervisor and policy advisor, Liu said Thursday.

The CBRC was conducting comprehensive comparisons and analysis of China's banking institutions aiming at establishing an efficient risk management system within the banking sector.

The priority of the CBRC was to maintain the stability of the banking sector and decrease the amount and ratio of non-performingloans (NPL) in China's state-owned commercial banks, Liu noted.

Liu said the high NPL ratio in China's commercial banks had become a major disadvantage for banks in competing internationallyand the CBRC aimed to help the commercial banks decrease the ratio before 2005 when China complied with its commitments to the World Trade Organization to completely open up the domestic financial market.

The commercial banks needed to adjust their internal corporate structure, increase business transparency and information publication, Liu said, adding that strengthening the supervision of information publication and building early-warning mechanisms for potential financial risks were among the CBRC's major tasks.

"Soon you will see the difference", Liu said.

Official statistics show the weighted average of NPLs in the four state-owned commercial banks was 26.12 percent by the end of 2002, and by the end of March this year, the number dropped 1.99 percent to 24.13 percent, with outstanding NPLs falling 27.1 billion yuan (3.27 billion US dollars) since the end of 2002.

The CBRC was established on Apr. 28 to supervise the business operations of China's commercial banks, among which are four state-owned commercial banks and asset management corporations, three state policy banks and 11 shareholding commercial banks.

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