The China Banking Regulatory Commission (CBRC) said on Saturday it may change the draft rules on capital adequacy ratios it originally sent to banks for feedback, Reuters reported. The rules, a draft of which was issued last month, would tighten banks’ capital restrictions by excluding subordinated bonds held by other banks from qualified capital reserves. Such a policy would effectively tighten lending by forcing institutions to hold other forms of capital. Since record lending in the first half of 2009, some banks have seen their capital adequacy ratios decline, even as Beijing has expressed concern about bad loans and speculative bubbles. The suggested restrictions intended to address these issues were blamed for a severe correction in mainland stock markets in August. A CBRC spokesman did not specify what the revisions to the rules would be, but the regulator has said that changes on subordinated bonds would be phased in gradually instead of forcing banks to exclude such assets all at once.
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