China's banking watchdog has launched the country's first risk
rating system for the country's joint-stock banks, numbering 11 so
far, in a move to tighten supervision and propel the banks to
improve competitiveness.
The China Banking
Regulatory Commission (CBRC) said on February 23 it could
confine the business scope of the banks or even take over those
with poor results in the rating.
The rating would cover the banks' capital adequacy, asset
safety, management, profits, liquidity and sensitivity to market
risks, said a spokesman for the commission.
China's joint-stock banks will then be divided into five
categories in line with the rating results, ranging from "sound" to
"poor."
The spokesman said the rating, as an annual practice by the
CBRC, would be an important criterion for considering a joint-
stock bank's market access and appointments of senior staff.
He said the regulator would decide when to publicize the rating
results.
The CBRC plans to organize frequent and wide-ranging spot
examinations for banks with low ratings, among other efforts to
urge them to improve, said the spokesman.
Experts note the new rating system would be a sustained push for
joint-stock banks to enhance corporate governance and improve
internal controls.
(China Daily February 24, 2004)