The CBRC Held Symposium on the Banking Industry Supporting Supply-side Structural Reform

 

On June 23 morning, Guo Shuqing, Chairman the CBRC visited the Agricultural Bank of China (ABC) and held a symposium on the banking industry supporting the supply-side structural reform. Officials from ABC, China Construction Bank, CITIC Bank, Everbright Bank, Huaxia Bank, Minsheng Bank, Bank of Beijing, and Beijing Rural Commercial Bank attended the symposium and introduced their participation in corporate restructuring, reducing corporate leverage, disposal of non-performing assets and other work.

 

The symposium pointed out that in this year, banks effectively supported the supply-side structural reform and the target of “reducing over-capacity, de-stocking, de-leveraging, reducing cost and addressing weak links”, continuously improved financial services and achieved tangible progress. At the same time, it should be noticed that there are still weak areas such as lack of differentiated financial service, insufficient financial innovation and imperfect external policy environment for the banking industry to support the supply-side structural reform.

 

Chairman Guo pointed out that banking institutions should improve their capacity in supporting supply-side structural reform from the following four aspects. First, banks should realize the importance of supporting the supply-side structural reform and be aware of the financial needs of local areas, enterprises and residents. Second, banking institutions should explore more effective ways, including setting up specialized operating institutions, establishing funds where private enterprises and foreign capital participated, supporting government and social capital cooperation projects and reform of state-owned enterprises. Third, while improving services, banking institutions should enhance their own risk control capacity, especially credit risks and liquidity risks. In carrying out the debt-to-equity swap, banking institutions should ensure that risks are effectively segregated, and, at the same time, study the issue of regulatory capital measurement in the process of debt-to-equity swap. Forth, governments at all levels, banks, and enterprises should fully play their roles and enhance cooperation. Banks should strengthen information sharing and operation with local governments and judiciary authorities so as to crack down debt defaults and improve financial ecology and external environment.

 

Chairman Guo stressed that banking institutions need to continue tackle the “zombie enterprises” and push forward the process of reducing over-capacity. Banking institutions shoul implement the differentiated housing credit policy and curb the real estate market bubble in some areas. Banking institutions should promote market-oriented and legal debt-to-equity swap and deleverage, strengthen the management of service charge and increase supply of financial services to reduce the cost of enterprises. At the same time, banking institutions should further strengthen the service for agro-related areas and micro- and small-sized enterprises, support enterprises to engage in the Belt and Road initiative, and provide better services for enterprises’ overseas development.

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