2014-05-19

Chinese Banks in Crosshairs of Interbank Borrowing Restrictions

Recently, banking regulators moved to limit banks ability to borrow on the interbank market.
China Orders Interbank Lending Curbs to Quell Shadow Debt
A commercial bank should limit its interbank borrowing to less than a third of its liabilities, while its lending to another financial firm shouldn’t exceed 50 percent of its Tier 1 capital, according to a statement on the People’s Bank of China’s website yesterday. Financial institutions need to better manage the maturity of interbank funding and control liquidity risks, the PBOC said.

127号文挤压同业水分 兴业银行同业负债超三成
Wind data shows that at the end of the first quarter of 2014, of 16 listed banks the proportion of interbank assets only came to 13.42% of total assets and the ratio of interbank borrowing to total assets was 15.17%, overall there is no pressure. Still, Industrial Bank and Bank of Ningbo are two of 16 listed banks that exceed the borrowing limit.

Industrial Bank, dubbed by peers "the king of the industry," had interbank liabilities equal to 37.3% of total liabilities at the end of Q1. Bank of Ningbo reached 35.12%; the Bank of Nanjing and Bank of Beijing were 29.6% and 29.33%, respectively.

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