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The China Banking Regulatory Commission (CBRC) Thursday announced measures to enhance the supervision of non-performing assets at the four state-owned commercial banks.
It also published new rules, effective immediately, on monitoring non-performing assets at Chinese commercial banks and an appraisal of their efforts to reduce problem loans.
The new rules require commercial banks to report their non-performing loans on a monthly basis, and their overall non-performing assets at each quarter, to the CBRC, it said.
The commission said it will soon send resident representatives to the headquarters of the four State-owned commercial banks to get "first-hand" information on their management and reforms.
Within the commission, special posts will be set up to supervise the four banks' loans and non-credit assets and evaluate their overall levels of risk.
China's four state-owned commercial banks - the Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China - hold more than half of the nation's total loans, which stood at 17 trillion yuan (US$2 trillion) at the end of last year.
Substantial progress has been achieved in their campaign to reduce bad loans in recent years, as banking reform accelerated to prepare them for intensifying competition after the local market fully opens up to foreign banks in 2007, as required by the nation's World Trade Organization commitments.
Their non-performing loans totalled 1.9 trillion yuan (US$229 billion) at the end of last year, accounting for 20.36 percent of their total lending, down 5.85 percentage points from one year earlier.
And the government has stepped up support for reforms within the four banks, which all have plans to launch initial public offerings (IPOs).
Late last year, the central government injected US$45 billion of foreign exchange reserves into the Bank of China and China Construction Bank, which were chosen for a pilot joint-stock restructuring.
They are reportedly targeting IPOs this year of the next.
The Industrial and Commercial Bank of China, the largest of the four in terms of assets, said last month it plans to complete its joint-stock restructuring and prepare for a stock offering by the end of 2006.
The CBRC said earlier this year it has set targets using seven benchmark indicators, such as the net return on equity (ROE) and cost/revenue ratio, for the two pilot banks' to meet before 2007. The criteria was calibrated in accordance with the average level of the world's top 100 banks.
Their non-performing loan ratios will both drop to around a healthy 4 percent after the ongoing restructuring ends, but the commission did not specify when.
(China Daily March 26, 2004)
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