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Tighter financing controls looming for China's banks

BBR Staff Writer Published 17 May 2006

Chinese financial regulators are set to impose more stringent controls on the country's biggest state-controlled banks as part of reforms to modernize China's financial system.

Bank of Communications, the Industrial & Commercial Bank of China and the Agricultural Bank of China are among the lenders set to face tighter controls, including maintaining capital adequacy ratios at 8% or better and capping their non performing loans ratio at 5%. These conditions were already applied to the two biggest banks in the country, China Construction Bank and the Bank of China. As well as the financing reforms, many of the big five have taken on foreign investment partners via minority stakes at the behest of the government, which hopes that the foreign influence can help reform their corporate governance and management practices.

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