China steps up oversight of commercial banks

Bloomberg filepix for illustration purpose only.

Bloomberg filepix for illustration purpose only.

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BEIJING (Dec 2): China is stepping up risk control requirements for commercial banks’ off-balance sheet business, marking another step in Beijing’s efforts to prevent risks from shadow banking activities.

In new measures announced by the China Banking and Insurance Regulatory Commission (CBIRC) on Friday, commercial banks will have to routinely conduct stress tests on their off-balance sheet business to gauge risks, and ensure such activities are within their business scale and risk-management capability.

In recent years, China has stepped up oversight of off-balance sheet financing, concerned about the hidden risks in the high volume of complex and potentially risky loans in the sector.

Commercial banks should also disclose major risk event and investment operations of the business, the CBIRC said.