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| Chinese Banks See Improved Capital Adequacy: Official |
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Chinese banks saw their capital adequacy greatly improve during the past three years as the country's banking reforms progressed steadily. The capital adequacy ratio (CAR), the measure of a bank's own capital in proportion to its outstanding loans, had reached the international standard of 8 percent for 66 Chinese banks, said Tang Shuangning, vice chairman of the China Banking Regulatory Commission. Total assets of the banks that met the required CAR accounted for 74 percent of the banking industry by the end of September, compared with 0.56 percent by the end of 2003 when only eight banks complied. The non-performing loan (NPL) ratio of commercial banks had dropped from 23.7 percent at the end of 2002 to 7.6 percent in September. Meanwhile, their shortfall of provision for NPLs had decreased from 1.6 trillion yuan (US$200 billion) to 455.2 billion yuan (US$56.9 billion). The banking watchdog vowed to ensure financial institutions had adequate opportunities to explore broader business fields on condition that they acquainted themselves with the market and had efficient risk management, the Shanghai Securities News reported Friday. As the interim period after China's entry into the World Trade Organization drew to an end, the banking sector should prepare for the challenges in the era of full openness by speeding up reforms and strengthening corporate governance, said Tang. (Xinhua News Agency November 24, 2006) |
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