China’s new banking regulator yesterday outlined wide-ranging efforts to rein in financial risks, including clamping down on shadow lending and curbing funding for property speculation.
Speaking at his first news conference in Beijing, China Banking Regulatory Commission Chairman Guo Shuqing (郭樹清) said he would coordinate with other financial authorities, including the central bank, to plug loopholes in regulations for cross-market financial products and update rules that no longer fit with banks’ current business and risk management.
“Banks, trusts, fund management firms, brokerages and insurers all have asset-management operations, but because they have different regulators and are subject to different rules, there’s been some chaos,” Guo said at a press briefing with his deputies in Beijing.
Having one set of rules for asset management products would enable each regulator to “set higher standards,” as well as “improve transparency and expose the financing hidden in the shadows,” he said.
Guo, 60, dismissed speculation that he might lead efforts to revamp the nation’s financial regulators, calling it a “rumor.”
In addition to the joint rules, the banking regulator is drafting a separate regulation on banks’ wealth-management products (WMPs), commission Vice Chairman Cao Yu (曹宇) said at the briefing.
WMPs, which promise higher returns than deposits and are viewed by many investors as a form of risk-free savings, surged to 29.1 trillion yuan (US$4.2 trillion) as of Dec. 31, Cao said.
The surge in WMPs, most of which were issued by lenders, has accounted for a significant proportion of the expansion in shadow banking in China, leading the central bank to start including the products in its macro-prudential assessment framework this quarter to better gauge credit growth and potential financial-system risks.
The commission also plans to require banks to move more shadow business onto their books as some lenders’ off-balance sheet assets have outgrown those accounted for on their financial statements.
“It’s not that we are against diversified business at banks, but we should focus more on their risks,” said Wang Zhaoxing (王兆星), another commission vice chairman .
The regulator wants to ensure that bank credit goes to the real economy and lenders make adequate provisions against potential risks, Wang said.
Meanwhile, Guo said the commission was paying close attention to real-estate bubbles as 45 percent of the nation’s new loans last year went to the property sector, with most going to personal mortgages.
Even as the overall leverage for Chinese households was “not high,” the fast growth in their borrowing over the past two years is worth monitoring, he said.
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases
DOWNCYCLE: Most buyers are wary about placing new orders, and although the decline could also be as little as 3%, it would be the first drop since the start of the year The average selling price of DRAM chips next quarter is expected to decline by up to 8 percent quarter-on-quarter, with memory chips used in notebook computers and consumer electronics seeing the steepest decline due to excess inventory and a shortage of components, market researcher TrendForce Corp (集邦科技) said yesterday. That means the DRAM industry is entering a new downcycle after experiencing a boom for three quarters, the longest uptrend in the history of the industry. The Taipei-based researcher said it expects the balance between supply and demand to begin tilting toward a surplus in the final quarter of this year. Most DRAM