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CBRC: Banks Should Basically Rely on "Endogenous Capital" to Shore up Capital Positions

12-07 18:19 Caijing
Systemically important banks will have to meet minimum capital thresholds of 6.5 percent for core tier one capital ratio, 7.5 percent for tier 1 capital ratio and 9.5 percent for capital ratio

China's banking regulator has restrained the country's lenders from relying too much on issuance of shares, bonds and bills in replenishing capital in a guidance published on Friday, as it prepares for the adoption of new stricter capital rules known as Basel III in January 2013.

"Commercial banks should stick to the capital replenishing mechanism based on endogenous capital accumulation," the China Banking Regulatory Commission said in a statement published on its website, "while digging deeper into the research of the innovation on capital instruments and expanding the channels to replenish capital by issuing new capital instruments."

Full statement in Chinese

In another statement also issued today, the CBRC has given a six-year "transition period" before 2013 when all banks will be required to keep a "capital conservation buffer" of 2.5 percent: all banks will have to set aside 0.5 percent of extra capital as reserves by the end of 2013, and the ratio increases by 0.4 percent annually in the following five years.

Systemically important banks will have to meet minimum capital thresholds of 6.5 percent for core tier one capital ratio, 7.5 percent for tier 1 capital ratio and 9.5 percent for capital ratio, according to the statement. (Statement in Chinese)

 

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