China’s banking regulator has published new regulations on bank capital requirements as part of a broader effort to implement new international Basel III guidelines aimed at reining in risk, Reuters reported. The new rules, which were hammered out by the Basel Committee on Banking Supervision to address regulatory deficiencies revealed by the financial crisis, require big Chinese banks to maintain minimum capital adequacy ratios of 11.5% beginning at the end of 2013. Smaller banks will be required to achieve a capital adequacy ratio of 10.5% by the end of 2016. If it feels credit growth is particularly strong, the China Banking Regulatory Commission (CBRC) may raise required ratios by an additional 2.5% as a discretionary measure. In practice, the new rules should not have a big impact on bank profits: At the end of June, the weighted average ratio of Chinese banks was already 12.2%. In its announcement, the CBRC also acknowledged concerns that credit growth in recent years “could lead to mounting systemic risks and must not be neglected.”
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