China's banks sound despite ratings downgrade
By Zhang Fengming |
February 23, 2010, Tuesday
|
Print Edition
Print Edition
CHINA'S banking sector is sound and healthy despite Fitch Ratings' downgrade of two banks this month, a senior central bank official said.
Chinese banks maintain a higher capital adequacy ratio of more than 8 percent compared with their global counterparts, Xuan Changneng, head of the Financial Stability Bureau under the People's Bank of China, said in comments published in Financial News.
"We hope that major rating bodies, including Fitch Ratings, can make a fair and objective view on Chinese banks," Xuan said in the paper affiliated with the central bank.
His remarks are aimed at rebutting Fitch's move to downgrade China Merchants Bank and China Citic Bank.
On February 2, Fitch downgraded the individual ratings of the two public banks from C/D to D, quoting a deterioration of their capital and rising credit risks amid a spiralling growth in loans in 2009.
"Such downgrading won't effect our financial reform and development," Xuan said. "The downgrades on the two banks won't affect financial regulators' supervision over and support for the two banks."
Banks in China extended 9.6 trillion yuan (US$1.4 trillion) of new yuan loans in 2009, almost double the target of 5 trillion yuan for the whole of last year, which triggered concerns over the quality of loan assets amid the credit boom.
But Xuan pointed out that the Chinese banking industry is growing in line with the real economy in a stable and healthy way.
The authorities have warned banks to ensure growth in loans is rational this year.
Chinese banks maintain a higher capital adequacy ratio of more than 8 percent compared with their global counterparts, Xuan Changneng, head of the Financial Stability Bureau under the People's Bank of China, said in comments published in Financial News.
"We hope that major rating bodies, including Fitch Ratings, can make a fair and objective view on Chinese banks," Xuan said in the paper affiliated with the central bank.
His remarks are aimed at rebutting Fitch's move to downgrade China Merchants Bank and China Citic Bank.
On February 2, Fitch downgraded the individual ratings of the two public banks from C/D to D, quoting a deterioration of their capital and rising credit risks amid a spiralling growth in loans in 2009.
"Such downgrading won't effect our financial reform and development," Xuan said. "The downgrades on the two banks won't affect financial regulators' supervision over and support for the two banks."
Banks in China extended 9.6 trillion yuan (US$1.4 trillion) of new yuan loans in 2009, almost double the target of 5 trillion yuan for the whole of last year, which triggered concerns over the quality of loan assets amid the credit boom.
But Xuan pointed out that the Chinese banking industry is growing in line with the real economy in a stable and healthy way.
The authorities have warned banks to ensure growth in loans is rational this year.
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