China regulator tells banks to improve credit processes
(15 September 2006 – China) A senior official at China’s central bank has fired a warning shot at the country’s banks, saying there is much work to be done to avoid a repeat of the bad loans that have bedeviled Chinese institutions.
People’s Bank of China deputy governor Su Ning said banks had not kept pace with international standards in corporate governance and credit risk procedures.
"China needs to prevent a rebound in non-performing loans and the occurrence of financial risks to ensure healthy development of financial institutions," he said.
The comments come as Beijing continues to try and dampen excessive investment in infrastructure across the country to avoid an overheated economy that could result in yet another tranche of non-performing loans.
Su Ning said China’s financial institutions had not responded positively to the measures put in place by the Chinese government to improve credit risk.
Chinese banks still labour under billions of dollars of bad debt following years of lending to state owned enterprises.
"China needs to prevent a rebound in non-performing loans and the occurrence of financial risks to ensure healthy development of financial institutions," he said.
The comments come as Beijing continues to try and dampen excessive investment in infrastructure across the country to avoid an overheated economy that could result in yet another tranche of non-performing loans.
Su Ning said China’s financial institutions had not responded positively to the measures put in place by the Chinese government to improve credit risk.
Chinese banks still labour under billions of dollars of bad debt following years of lending to state owned enterprises.
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