(Adds background, details)
SHANGHAI, April 10 China's banking regulator
said on Monday it has issued guidelines on risk control for
lenders, as authorities ramp up efforts to contain risks from a
rapid build-up in debt.
The move is the latest in a slew of measures taken by
China's regulators to reduce leverage and risk in the country's
Earlier steps have included reining in wealth management
products and probes into assets which are kept off banks'
China's banks extended a record 12.65 trillion yuan ($1.84
trillion) of loans in 2016, despite worries about the dangers of
prolonged debt-fueled stimulus.
The China Banking Regulatory Commission (CBRC) published the
guidelines on its official website, after a Friday news
conference which covered the authority's plans to prevent
systematic financial risks.
The guidelines advise lenders to adopt measures such as
focusing on loans which have been overdue for 90 days or more,
in order to strengthen risk control and maintain asset quality.
But they did not go into detail on what specific action should
Liquidity risk management should be improved by reducing
dependence on interbank deposits and enhanced emergency
management, the guidelines said.
Bankers were also advised to manage bond market volatility
by strictly controlling investment leverage and to strengthen
real estate risk control by adopting regular stress tests, among
Fears of a property market crash are growing in China as
more cities battle to cool heated housing prices by imposing
tougher lending requirements. Mortgages make up nearly a third
of big banks' total loans and properties are often used as
collateral for other credit.
The new guidelines aim to "make event more important risk
control, to dissipate the risks that the banking industry may
face," according to a question and answer paper that was
published on the CBRC website.
"The risks associated with the cross-selling of financial
products are down to a lack of co-ordination, lack of integrated
oversight and the existence of divided regulatory structures,"
Yang Jiacai, assistant chairman of the CBRC, said at the Friday
Chinese banks' 2016 earnings reports last month generally
showed deteriorating credit quality and high corporate debt
leverage continued to be a primary challenge for the industry,
as the world's second-largest economy grew at its slowest pace
in a quarter of a century.
Bad loans written off and transferred out by the top five
banks along rose by 16 percent last year to 309.6 billion yuan
(Reporting by Beijing monitoring desk and Engen Tham in
Shanghai; Editing by Kim Coghill)