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China banking regulator urges banks to strengthen risk management
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10:37, September 19, 2009

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China's banking regulator has reiterated that domestic lenders should seek to enhance their risk management and stick to regulatory requirements to reduce worries over financial risks caused by rapid credit growth this year.

"With bank loans growing rapidly, all kinds of risks are rising in the banking industry", Liu Mingkang, chairman of the China Banking Regulatory Commission, was quoted as saying by Saturday's China Daily.

Liu made the requirement at a conference in Shanghai in response to wide concerns of rising default risks at banks and asset bubbles in the capital market, sparked by a surge of new loans in the first eight months which reached about 8.15 trillion yuan (1.19 trillion U.S. dollars), far higher than the 4.91 trillion yuan credit for the whole of last year.

The ongoing global financial crisis has triggered a worldwide reflection on overhauling the financial supervision system, which includes revising and improving rules on capital adequacy, provision, leverage ratio, liquidity, as well as corporate governance and compensation system, the newspaper quoted Liu as saying at a conference in Shanghai.

Chinese banking sector should strengthen their compliance management and get prepared to follow up the upcoming changes among the global financial institutions.

Many Chinese banks have promised to slow down lending in the second half after the banking regulator urged domestic banks many times to ward off possible risks. New lending eased in July and August which saw new loans at 356 billion yuan and 410.4 billion yuan, respectively.

However, the central authorities have pledged to maintain its proactive fiscal policy and a moderately loose monetary policy as the country's economy is at a critical moment for recovery.

The Communist Party of China (CPC) Central Committee vowed Friday at the closing of the Fourth Plenary Session of the 17th CPC Central Committee in Beijing that the country would continue with macroeconomic policies to cope with the global financial crisis.

Source: Xinhua

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