China Financial Daily:CBRC Deng,A Unifying Asset Management Standard Is Necessary

PBOC should lead the top down design of asset management industry to avoidregulatory arbitrage and facilitate fund flow across different asset managementplayers, according to CBRC trust supervision director Deng Zhiyi as quotedsaying in Lujiazui conference. Deng suggested similar net capital requirementfor different asset managers, and 1:2 leverage ratio cap for trust companies forexample. Deng also said China should ban those channel businesses in assetmanagement which create idle fund circulation and lengthened funding chain.

    Recent regulation tightening has led to lower monetary multiplier and lowerM2 growth, and central bank’s macro policy cannot work without cooperationof banking regulation, according to PBOC Research Head Xu Zhong. Xu alsonoted that regulation competition among different financial regulators maylower the regulation standard and regulation competition between central leveland local level may also hurt financial stability. In addition, he said PBOCshould not provide free bail-out for small banks. PBOC should charge higherinterest when providing liquidity to small banks and banking regulatory shouldhelp monitor banks’ operations to facilitate central bank’s liquidity injection.

    China big four commercial banks are reported to have listed tens of billions ofnon-performing loans at Shanghai, Beijing and Tianjin Financial Exchanges fortransfer in June amid tightening regulatory crackdown on incompliantmovement of NPLs to off-balance sheets. In addition to exchange listing, bigfour banks also transferred a bulk of NPLs package to AMCs through targetedbidding at corporate level, with Cinda and Huarong AMCs as primary buyers,21st Jingji reported. Most of NPLs sold by those banks are off-balance sheetsassets, holding by AMCs or joint ventures (jointly established by banks andAMCs) on behalf of banks, which the regulations reiterate to suppress.