New Regulations On Capital Regulation Will Take Effect Next Year

China CBRC Yesterday (May 3rd) issued the "guiding opinions on the implementation of new regulatory standards in China's banking sector" (hereinafter referred to as "opinions"), the new standard has been implemented since January 1, 2012.

Reporters found that the "guidance" in the capital The new four regulatory tools such as adequacy ratio, leverage ratio, liquidity and loan loss preparation are unchanged from the plan approved by the State Council in February this year. Systemically important banks and non systemically important banking financial institutions meet the requirements of new regulatory standards respectively by the end of 2013 and before 2016.

According to the opinion, the new capital adequacy ratio supervise From the current two level classification (first level capital and two tier capital) to three level classification, namely, the core tier one capital, the other tier one capital and the two tier capital, strictly enforce the deductions for the core tier one capital, and enhance the capital tool's ability to absorb losses.

After the implementation of the new standard, the capital adequacy ratio of systemically important banks and non systemically important banks under normal conditions should not be less than 11.5% and 10.5% respectively. If there is a rapid growth in systemic credit, it is necessary to counter cyclical excess capital.

The CBRC has not yet explicitly stated which banks are classified as systemically important banks, but points out that the so-called systemically important banks will be selected according to capital size, capital adequacy ratio and associated risk. Earlier, there were rumors that ICBC, agricultural bank, Bank of China, construction bank, Bank of communications and China Merchants Bank were probably systemically important banks. For this reason, the CBRC sources said that the 6 banks were the first banks to complete the testing of new regulatory tools, but they did not mean systemically important banks.

In addition, in terms of liquidity, the liquidity coverage ratio (LCR) and the net stable financing ratio (NSFR) are introduced to enhance the effectiveness of liquidity risk regulation. In order to improve the supervision of loan losses, the CBRC raised a request for financial institutions to provide loans with a provision rate of not less than 2.5% and a provision coverage rate of not less than 150%. According to the annual report, by the end of 2010, the provision rate of the four lines was close to 2.5%, and the provision pressure was relatively small. In addition, regarding the leverage ratio of financial institutions, the leverage ratio of banking financial institutions should not be less than 4%, which has not changed compared with those previously announced.