The official banking regulator of China has lifted its targets for capital ratios for the country’s banks over concerns about a possible increase of credit risks, according to Bloomberg. Three sources have indicated that the China Banking Regulatory Commission raised the target for the five largest lenders in the country above the 11.5% minimum capital ratio. The commission responded to questions on Tuesday by saying there are new “differentiated target and ‘triggers’ on the five banks’ capital levels, with the target for all the banks’ capital adequacy ratios being low lower than the 11.5% minimum.”
The Industrial & Commercial Bank of China was advised to maintain capital adequacy ratios of at least 11.8%, while the Agricultural Bank of China should target 11.7%, said the sources. Fitch Ratings warned on Apr. 12 that there is a “high likelihood of a significant deterioration” in banks’ asset quality after the two-year credit boom, and revised its outlook for China’s long-term local currency rating on the risk of a government bailout of banks to negative, which could be a precursor for the first downgrade of the country’s debt since 1999.
