China will offer extra financial support to manufacturers next year, the
banking and insurance regulator said on Friday, after a run of bond defaults
by private firms in the sector.
The Banking and Insurance Regulatory Commission (CBIRC) has
encouraged banks not to pull loans to firms facing temporarily liquidity
issues, notably in the textile, clothing and paper-making sectors, and is
promoting the use of creditor committees to help borrowers resolve their
troubles.
But China''s banking sector is facing pressure as economic growth slows to its
weakest in nearly three decades, and five regional banks have been hit with
management or liquidity problems this year.
Non-performing assets of some small- and medium-sized banks are rising,
curbing their lending capability, Yang Liping, chief supervision officer with
the regulator, told reporters in Beijing.
Loans to manufacturers make up the largest part of that portfolio.
Yang said the process of absorbing bad loans needed time, and the situation
would not improve in the short term.
"We''ll use designated approaches to resolve different problems of high-risk
smaller (banking) institutions. But firstly, we need to know the real level of
asset quality and then help them to increase capital," she added to Reuters
on the sidelines of the conference.
Yang said banks could issue shares or perpetual bonds to recapitalise and,
longer-term, cut their investment risk and focus on their local savings and
lending businesses.
In another measure to boost liquidity, authorities will push 2 trillion yuan
($285.5 billion) of new loans - partly state-funded - to small and mediumsized firms next year, according to CBIRC''s inclusive finance department
head Li Junfeng.
The government has previously said lending growth to smaller firms by
China''s big five banks would be no less than 20% in 2020.
Commenting on a debate between markets and watchdogs on how quickly
and strictly to implement proposed tougher guidelines for once loosely
regulated asset management products, the CBIRC said it would make small
adjustments, without commenting on any extension period.
The CBIRC also said it was approving the country''s first wealth management
joint venture with a foreign controlling shareholder. Amundi Asset
Management will hold 55% of the project and Bank of China Wealth
Management the rest.
It would be set up "under the current regulation framework," said Wang
Daqing, large bank department chief at the CBIRC. Other "leading and
capable" foreign asset management firms were in talks with Chinese banks
on setting up similar joint ventures, he said.
Source: The Economic Times, India Wednesday, 23 December 2020