A new resolution framework will allow banks to continue to maintain the ‘standard’ classification for corporate borrowers in resolution rather than downgrade the account, among other measures.
The decision was made based on “severe insolvency” found at Baoshang Bank. The last commercial bank allowed to go bankrupt in China was in 2001.
Locally-headquartered banks are asked to cap fiscal 2020 dividends as a pre-emptive measure to ensure sustained lending given "significant uncertainties" ahead.
Banks should retain at least half of their earnings when making capital distribution decisions, which should be informed by regular stress testing to demonstrate ongoing lending capacity.
State-owned China Reform Holdings has set up a bailout fund to help ensure SOEs can avoid bond defaults. Meanwhile, 18 provincial governments have approval to inject capital into banks.
In the past week, the central bank has sharply eased loan classification and provisioning rules, and offered credit guarantees, to try and address an unwillingness among banks to lend to small businesses.
In a 'very severe shock' scenario, 23 banks would fail to maintain the 9% capital-to-risk weighted assets ratio, and the NPA ratio would reach 14.7%.
Chairman Heath Tarbert said it is unnecessary for the CFTC to be "the world’s policeman" for all swaps, given that most G20 jurisdictions have adopted similar swaps regulations.
APRA points to physical access barriers and a high degree of uncertainty that create challenges for banks in updating commercial property valuations.
APRA will modify its capital management guidance next week to account for a 'longer-term outlook', chairman Wayne Byres said.
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