Shanghai bank regulators instruct commercial banks to assess risks in off-balance sheet credit business

Banking regulators in Shanghai have told commercial banks in the financial centre to check their off-balance sheet businesses in a move to curb credit risks.

The local banking regulator recently issued a notice to lenders in its jurisdiction, requiring them to check their off-balance sheet credit business to better control credit risks, Zhou Wenjie, deputy head of the Shanghai Bureau of China Banking Regulatory Commission said.

Analysts said it is part of Beijing’s efforts to control credit risks amid rising concern related to shadow banking.

Authorities are tightening scrutiny of the lenders as the growing use of complex financial structures has raised concerns that bad lending and credit risks can be concealed in off-balance sheet businesses.

“Authorities are trying all means to control risks, to deleverage and try to assure liquidity was pumped into the real economy,” said Lu Zhengwei, Industrial Bank’s chief economist.