The required provision coverage ratio, which compares the amount of cash banks have in reserve with that of non-performing loans, may be reduced to as low as 130 percent for three big lenders and 140 percent for another four, the sources said. The current floor for the ratio is 150 percent.It is prudent for banks to be extra conservative during the good times and easier with credit in the bad times because the risk/reward favors lending during credit crunches. This smacks more of a move to expand lending heading into a period of impaired balance sheets, to offset the impact of rising NPLs on banks' ability to lend.
The banks that are eligible for the bigger cut include Agricultural Bank of China, China Construction Bank and Bank of China. Industrial and Commercial Bank of China, Bank of Communications, China Merchants Bank and Industrial Bank may see their ratio cut by 10 percentage points, the sources said.
...Several bank employees told Caixin earlier that their profits grew to a large extent because their banks reduced the amount of cash set aside for dealing with bad loans.
They said this was a common practice and banks often set more cash aside than necessary when incomes were good so they could use it during difficult times.
波士顿中国留学生因骚扰民主活动人士被判入狱
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4月24日,来自中国的前伯克利音乐学院学生吴啸雷被美国法院判处九个月监禁。法院要求吴啸雷6月7日前往指定的监禁 […]...
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