Tighter ruling sees banks raising CAR
By Zhang Fengming |
November 6, 2010, Saturday
|
Print Edition
Print Edition
BANKS in China boosted their average capital adequacy ratio because of a tighter requirement imposed on the main indicator of a bank's financial strength, the banking regulator said yesterday.
The average CAR for Chinese banks increased to 11.6 percent at the end of September, up 0.5 percentage point from the end of June, the China Banking Regulatory Commission said yesterday.
The average tier-1, or core, capital adequacy ratio also went up 0.5 percentage point to 9.5 percent at the end of September, the CBRC said on its website.
Authorities have raised the bar for banks' capital requirement to cushion against possible rise in bad assets. The global financial crisis, which caused many big-name banks in the West to either collapse or survive with the help of state bailouts, also spurred the CBRC's decision to tighten financial supervision of banks.
Banks in China lined up to raise capital via rights offers or initial public offerings to replenish capital.
China's big-five banks have announced plans to raise a combined US$63 billion since the beginning of this year after the banking industry extended a record 9.6 trillion yuan of new loans last year.
The minimum CAR for the five major state-owned banks is set at 11.5 percent while it's 10 percent for smaller banks. Before the crisis, banks were required to keep the minimum CAR at 8 percent.
The average CAR for Chinese banks increased to 11.6 percent at the end of September, up 0.5 percentage point from the end of June, the China Banking Regulatory Commission said yesterday.
The average tier-1, or core, capital adequacy ratio also went up 0.5 percentage point to 9.5 percent at the end of September, the CBRC said on its website.
Authorities have raised the bar for banks' capital requirement to cushion against possible rise in bad assets. The global financial crisis, which caused many big-name banks in the West to either collapse or survive with the help of state bailouts, also spurred the CBRC's decision to tighten financial supervision of banks.
Banks in China lined up to raise capital via rights offers or initial public offerings to replenish capital.
China's big-five banks have announced plans to raise a combined US$63 billion since the beginning of this year after the banking industry extended a record 9.6 trillion yuan of new loans last year.
The minimum CAR for the five major state-owned banks is set at 11.5 percent while it's 10 percent for smaller banks. Before the crisis, banks were required to keep the minimum CAR at 8 percent.
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