Money

Banks must give risk reports by June: CBRC

By Yidi Zhao (China Daily)
Updated: 2010-04-12 09:36

BOAO - China's banking regulator asked the nation's lenders to submit reassessments of their risk exposure by the end of June, said Liu Mingkang, chairman of the China Banking Regulatory Commission.

Inspectors will be sent to banks in the third quarter to check on these risk assessment reports, Liu said on Sunday at the Boao Forum for Asia being held in southern China's Hainan province. The regulator will discuss with banks any deviations that are found, he said.

"By the end of the third quarter we will downgrade assets if needed and increase provisions" after the on-site inspections Liu said, without elaborating.

China has tightened regulations on concern a record $1.4 trillion of bank lending last year is fueling asset bubbles that will saddle banks with bad loans. The banking regulator last month reiterated a call for lenders to toughen scrutiny of loans to property developers as the government ordered 78 State-owned enterprises to exit the real estate sector.

Some lenders in Beijing have already begun requiring down payments on second mortgages of more than 60 percent the value of the property, Liu said. Nationwide, banks are asking for down payments of 40 percent to 50 percent for second mortgages, he said.

The world financial crisis showed that leverage needs to be reduced, Liu said. Markets can never regulate and supervise themselves, he said, adding that financial regulations in China will go "back to the basics".

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