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June 10, 2019

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China vows ample liquidity for small banks

Source: Xinhua | 00:00 UTC+8 June 10, 2019 | Print Edition

China will continue to provide liquidity support to small lenders, according to a meeting attended by the country’s financial authorities and major banks.

The meeting, held by the office of the financial stability and development committee under the State Council, was organized to ensure stability in interbank businesses, according to an online statement by the People’s Bank of China yesterday.

The country’s major lenders, including six major state-owned commercial banks and 12 joint-stock banks, vowed to ensure stable interbank lending to small and medium banks after fluctuations in the interbank market were spotted over the past few days, according to the statement.

China’s small and medium banks have relatively ample liquidity and their risks are under control, said the China Banking and Insurance Regulatory Commission yesterday.

The central bank will continue to leverage various monetary policy tools to ensure reasonable and ample liquidity in the financial market and provide targeted liquidity support to small and medium lenders, the statement said.

While a few small banks failed to release their annual reports on time, those were just special cases caused by various reasons such as change of auditors, the CBIRC said, reported by Financial News, a publication run by the central bank.

Regulatory authorities will urge the banks to accelerate the auditing process and disclose their financial results as soon as possible, the CBIRC said.

Financial regulators have warned and punished individual institutions that violated rules, it said.

The CBIRC and the central bank recently announced the takeover of the Inner Mongolia-based Baoshang Bank, citing “serious credit risks.”

Since the takeover, the bank’s business operations have been running as usual, while liquidity has been generally ample, the CBIRC said.

The bank’s assets will be appraised at an appropriate time and the information will be disclosed, it added.

Concerns over credit risks of the country’s small banks rattled the interbank market after the takeover of Baoshang Bank by regulators last month.

Authorities reiterated that the takeover was a single case and risks in the country’s small and medium banks are under control.

China has stepped up targeted support to the country’s small lenders this year in an attempt to boost lending to the real economy, with a targeted cut in reserve requirement ratio for some small and medium banks effective from May 15.

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