03 Sep 2018
Fines levied by China’s banking regulator have surged since Guo Shuqing became its head in February 2017, rising nearly six-fold from the cumulative fines levied over the previous 14 years, UBS said in a report.
The exponential increase in fines highlights a much stricter level of enforcement of regulations in the banking sector as Beijing seeks to fend off systematic financial risks.
Analysis of recent fines shows that at least 65 percent of them have been issued in relation to hiding non-performing loans (NPLs), according to the report dated August 30.
The closer regulatory scrutiny will deter future efforts to understate NPLs, leading to a surge in NPL recognition, it said.
The effort is “part and parcel of state-centered efforts at state-owned enterprise reform and the de-leveraging campaign and is aimed at dissuading banks from extend and pretend type activities to keep credit lines open to defaulted companies,” UBS said.
The China Banking and Insurance Regulatory Commission did not immediately respond to an emailed request for comment.
– By Shu Zhang and Ryan Woo, Reuters, 31 August 2018.
Link to Reuters.
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