Banking regulator to revise capital adequacy rules for Chinese banks

08:29, June 10, 2011      

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The China Banking Regulatory Commission (CBRC) on Thursday said it is drafting new regulations concerning capital adequacy ratio (CAR) amid tight capital reserve among banks.

A CBRC spokesman said that the commission will solicit public opinions on the new rules and open the topic for discussion, though he believes the revision will only have a limited impact on banks' current CAR levels.

The revision is designed to keep China's banking industry in compliance with the Basel III framework, a set of new global banking requirements agreed to by Group of 20 leaders at the end of last year, the spokesman said.

The CBRC announcement arrives at a time when many Chinese banks plan to raise funds in the coming months to replenish their capital base due to last year's lending binge.

Earlier last month, the CBRC unveiled stricter regulation rules for commercial banks to help improve capabilities of the country's banking and financial institutions in combating risks.

The new standards set the minimum capital adequacy ratio for banks of systematic significance at 11.5 percent, while that for banks with non-systematic significance at 10.5 percent from next year.

According to the CBRC, the average CAR of commercial banks was 11.8 percent at the end of March, down 0.4 percentage point from the end of last year.

The CAR for the Agricultural Bank of China, one of China's four largest state-owned banks, dropped to 11.4 percent in the first quarter of this year, below the CBRC's requirement, forcing the lender to issue 50 billion yuan worth of bonds to boost CAR.

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