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Supervision shifts to systematic risks

SHANGHAI'S banking regulator will focus its supervision on avoiding systematic risks rather than concentrating on specific banks, the head of the regulator said yesterday.

"We will avoid systematic risks and watch both the credit and fee-based income of banks," said Yan Qingmin, head of the Shanghai Bureau of the China Banking Regulatory Commission.

Chinese banks are expanding their fee-based income from traditional services. This means the regulator will have to shift part of its regulatory work to monitor the banks' fee-based business, said Yan during the PCEC Shanghai Institute of International Finance forum.

The regulator will encourage banks to offer simplified products and to avoid obscure but hot-selling products, like those offered by banks in the United States, which sparked the financial crisis. The crisis was also made worse by cross-selling among financial institutions, but it gave the Chinese regulator valuable lessons, Yan said.


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