From July 1, banks will have to classify assets – bond investments, interbank loans and off-balance sheet assets – into five categories ranging from “normal” to “loss”, according to rules published by the central bank and the authority of banking and insurance regulation.
These rules will allow “commercial banks to more accurately assess credit risks and take into account the actual quality of their financial assets”, said the People’s Bank of China (PBC) and the Banking and Regulatory Commission. Insurance (CBIRC).
The current rules are inadequate because “in recent years, the asset structure of China’s commercial banks has changed a lot and the risk classification faces various new situations and problems,” the CBIRC said. According to this commission, the new rules will make it possible to protect themselves more effectively in terms of credit risk.
They will apply to the new activities of banks, which have until the end of 2025 to reclassify their current financial assets.
(Shanghai office report, French version Claude Chendjou)
