Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC) has warned that serious risks are building up in the country’s financial system, the Financial Times reported. Liu’s statements, including his call for urgent upgrades to financial risk management practices, stand in contrast with the optimistic outlook expressed in the interim reports issued by state-owned banks in recent weeks. The banks dismissed concerns about risks on their balance sheets; Bank of Communications, for example, said that even if real estate prices fell by 50%, it’s non-performing loan ration would only increase by 1.2 percentage points. Such suggestions have met with wide skepticism among analysts, and senior bank officials have since been ordered to cease disclosing the details of their stress test results.
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