China policymakers failed to give direction during credit crunch: ICBC
Boss of biggest lender says policymakers did not provide direction during credit crunch last week
The mainland's biggest bank was uncertain of how to respond to turmoil in the money markets last week because there was no clear direction from policymakers on what they wanted to achieve, its chairman said.
Jiang Jianqing, who heads Industrial and Commercial Bank of China, stopped short of directly criticising regulators for their handling of the stand-off over money market liquidity, which saw overnight borrowing rates soar and some smaller banks panic.
But Jiang's comments are the clearest indication yet of frustration among senior bankers over how the central bank handled the situation, with markets calming down only after the People's Bank of China made public comments this week.
"We hope that in future, policy expectations can be clearer. That would help us understand the overall market situation better and more deeply. Those few days - even for us - were genuinely a bit tense," Jiang said on Tuesday.
He said ICBC's own liquidity situation was sound and that it was prepared to heed the call by the PBOC for big banks to lend to their smaller counterparts, should they face short-term cash crunches, to help stabilise the market. But in order to play that role, he said, ICBC and other big banks needed a clearer sign of where things were headed.
He described a harried few days in the past week, when ICBC and other banks tried to assess what was happening in the money markets as the central bank apparently decided to use the opportunity of a cash crunch to try to choke off funds flowing to speculative activities and the informal lending sector, sending rates to crisis-like levels.