China’s four biggest banks are among lenders who have been set differentiated reserve requirement ratios, said Liu Mingkang (劉明康), chairman of the China Banking Regulatory Commission (CBRC).
Liu didn’t specify whether all four banks or only some were targeted, nor by what margin they were ordered to raise ratios. The regulator spoke to reporters while attending the closing session of the National People’s Congress in Beijing yesterday.
Liu didn’t say when the differentiated reserve requirement ratios were imposed or whether they are still in place.
Central bank officials, including Governor Zhou Xiaochuan (周小川), have said that they will use differentiated ratios in addition to the universal reserve requirement to curb lending. Under the system, individual lenders are told to hold differing amounts as reserves according to capital adequacy levels and lending growth.
The nation’s biggest four banks are Industrial & Commercial Bank of China Ltd (ICBC, 中國工商銀行), China Construction Bank Corp (中國建設銀行), Bank of China Ltd (中國工商銀行) and Agricultural Bank of China Ltd (中國農民銀行).
The People’s Bank of China has imposed differentiated reserve requirement ratios on 40 banks since January, Xinhua news agency -reported last month, citing an unnamed spokesman at the central bank. China has increased the overall reserve requirement for banks twice this year and raised interest rates once in a bid to curb inflation.
The 40 lenders targeted were local lenders, which had lower capital adequacy ratios and “rampant” growth in lending, Xinhua said, citing the spokesman. China’s central bank hasn’t publicly disclosed which banks were targeted and by how much their reserve requirements were raised.
Bank of China hasn’t been selected for the differentiated requirement, bank president Li Lihui (李禮輝) said in Beijing on March 5.
Liu also said yesterday that outstanding loans to the financing vehicles of local governments are now “under control” and that the banking regulator will closely monitor the situation.
The central bank has raised banks’ reserve requirement ratio eight times since the beginning of last year, excluding any extra requirements for individual lenders not publicly announced. The ratio now stands at 19.5 percent for the biggest banks.
Chinese banks extended 535.6 billion yuan (US$81.5 billion) of -local-currency loans last month, the central bank said yesterday. That was less than the 600 billion yuan median estimate in a Bloomberg News survey of 19 economists.