Property crisis pushes China to increase financial risk monitoring, asset disposal for troubled small banks
- Commercial banks and rural financial institutions will be helped to dispose of bad assets and loans, while also having their capital replenished through multiple channels
- Beijing is striving to establish a high-quality inclusive financial system over the next five years to increase funding for small market entities and agricultural sectors
China has vowed to intensify its risk monitoring and bad asset disposal for stressed small banks, as the ongoing property crisis triggered by Evergrande and Country Garden poses a threat to financial stability.
Authorities will help city commercial banks and rural financial institutions dispose of bad assets and loans while also replenishing their capital through multiple channels, according to a guideline issued by the State Council on Wednesday.
But in a move to prevent risk contagion, the banks have been restricted from operating outside their designated regions.
Beijing is striving to establish a high-quality inclusive financial system over the next five years to provide more funding for small market entities and agricultural sectors, although their level of bad loans and fundraising costs are stubbornly high.
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