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CBRC targets property, auto loans
( 2003-09-05 09:17) (China Daily)

The China Banking Regulatory Commission (CBRC) said Thursday it had listed fast-growing property loans and auto financing as two of its supervisory priorities for State-owned and joint shareholding commercial banks for the near term.


A visitor looks at credit cards on display at a financial banking technology exhibition in Beijing yesterday. The China Banking Regulatory Commission said that it had targeted "examination and monitoring of banks' risk management" as one of its near-term priorities. [Reuters]

The real-estate and auto sectors, which witnessed rapid growth financed heavily by bank loans over recent months, are the primary reasons behind growing worries that the economy is getting overheated. Lending irregularities have been reported in both sectors.

The CBRC said Thursday that one of its near-term priorities was "to focus on the examination and monitoring of banks' risk management, as well as asset quality in key areas such as mortgage lending and auto financing, which have grown rapidly over the past while."

The commission has identified supervisory priorities for State-owned commercial banks as well as joint-stock commercial banks for the coming years at two conferences, it said.

The commission will enhance the supervision of corporate governance as well as internal controls of these banks in line with risk-based supervision.

"The CBRC will not only formulate the new guidelines and improve the existing ones on corporate governance and internal control, but also review and correct any problems in these areas," according to a commission release.

The CBRC will also assess the overall risk exposures of credit assets, non-credit assets and off-balance sheet items through examinations, so as to identify banks' weaknesses in management and internal controls, and follow up on their corrective actions.

The commission said starting from the beginning of 2004, the State-owned commercial banks and joint shareholding commercial banks will adopt the internationally-accepted five-category loan classification system, while the existing Chinese-style four-category loan classification system will be phased out.

The CBRC also said it would further improve the comprehensive risk and performance assessment system of State-owned commercial banks to assess their risks in a comprehensive and objective way. It will also create the basis for the implementation of the new Capital Accord.

The commission said last month China would not apply the new Capital Accord before 2006. The accord is expected to be finalized by the Basel Committee on Bank Supervision within this year, but officials have stated China would continue to use the current system for now.

 
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