Official: China to move forward with tougher bank rules (3)

Chen Dongsheng, chairman and CEO of Taikang Life Insurance Co Ltd, said regulators' attempts to encourage financial innovation will be thwarted so long as interest rates are not set according to market conditions. That, in turn, will lead to distortions in the prices of all sorts of financial instruments.

Banks have seen their profits increase at a slower pace as interest rates become more liberalized and interest margins narrowed earlier this year. Large banks have begun trying to replenish their stores of capital by selling subordinated bonds while preparing to meet next year's stricter standards.

In the first 10 months of the year, 13 banks issued 60 billion yuan ($9.62 billion) worth of subordinated bonds in the inter-bank bond market.

Zhou Xiaochuan, governor of the People's Bank of China or the central bank, said on Tuesday that the government will be "unswerving" in its push to reform interest rates so that they better reflect market conditions.

wangxiaotian@chinadaily.com.cn

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