China Banking and Insurance Regulatory Commission: vigorously reduce the high-risk shadow banking business in 2020, and strictly prevent the illegal inflow of credit funds into real estate

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Reporter Hao Xinyao
On the evening of January 11, the official website of China Banking and Insurance Regulatory Commission announced that the national banking and insurance industry supervision and management conference in 2020 would be held recently. The meeting reviewed the work in 2019, studied the current economic and financial situation, and deployed the tasks in 2020. Guo Shuqing, Secretary of the Party committee and chairman of the CIRC, attended the meeting and delivered a speech.
The meeting stressed that we should resolutely win the battle to prevent and defuse financial risks. Handle the high-risk institutions in a safe manner, consolidate the responsibilities of all parties, and do a good job in coordination, cooperation and policy guidance. Continue to dismantle the shadow banking, especially to reduce the high-risk shadow banking business, to prevent the resurgence. We will resolutely implement the requirements of “no speculation in housing”, strictly implement the regulatory rules such as credit concentration, and strictly prevent the illegal flow of credit funds into the real estate sector. For financial groups built in violation of laws and regulations, we should, on the premise of stabilizing the overall situation, seriously investigate and deal with violations of laws and regulations, make full efforts to clean up assets, recover stolen goods for losses, and reform and restructure. We will further promote the special rectification of Internet lending and increase the standardization of Internet insurance. We will continue to work with local governments to deepen the reform and restructuring of state-owned enterprises, accelerate the adjustment of economic structure, and resolve the hidden debt risks. We will effectively prevent and resolve external shock risks, do a good job in stress testing of banking and insurance institutions, improve response plans, and stabilize market expectations.
The meeting pointed out that key progress has been made in preventing and defusing financial risks. A total of 2 trillion yuan of non-performing loans were disposed in the whole year, and all loans overdue for more than 90 days by commercial banks were included in the management of non-performing assets. Shadow banking and cross financial risks continued to converge, and the scale of shadow banking dropped 16 trillion yuan from its historical peak in the past three years. The risk of online lending declined significantly, and the number of institutions, loan balance and participants declined for 18 consecutive months.
The quality and efficiency of financial institutions in serving the real economy have been continuously improved. In 2019, RMB loans increased by 17 trillion yuan, an increase of 1.1 trillion yuan over the previous year. The balance of insurance fund utilization was about 18 trillion yuan, an increase of 9.5% over the beginning of the year. Private enterprise loans increased by 4.25 trillion yuan. The loan balance of inclusive small and micro enterprises was 11.6 trillion yuan, an increase of more than 25% year on year. The loan growth of inclusive small and micro enterprises of five large banks was more than 55%, and the comprehensive financing cost of newly issued inclusive small and micro enterprise loans fell by more than 1 percentage point.
The reform of key institutions and areas has been deepened, and the corporate governance mechanism has been further improved. 19 opening-up measures were newly launched, and 51 applications for the establishment and opening of insurance institutions of foreign banks were approved.
It was pointed out at the meeting that the supervision and evaluation measures for small and micro enterprises’ financial services of commercial banks should be introduced as soon as possible, the comprehensive financing cost of inclusive small and micro enterprises’ loans should be reduced by another 0.5 percentage points, the loan growth rate should be higher than the average growth rate of various loans, and the loan growth rate of inclusive small and micro enterprises of five large banks should be higher than 20%.
The meeting demanded that the level of opening up must be improved. Guide the stable transformation of bank financing and trust industry, establish and improve the third pillar of pension security, and lay a solid foundation for the long-term sustainable and healthy development of the capital market while optimizing the financial product structure and institutional system. We will further expand opening up to the outside world and accelerate the implementation of policies that have been issued. We will vigorously improve the equity structure, and encourage domestic and foreign professional institutions with outstanding main businesses, advanced management and excellent records to invest in Chinese banks and insurance companies.
The CBRC will also work closely with relevant departments to study and determine the list of systemically important financial institutions in China. Distinguish systemically and non systemically important institutions and implement differentiated supervision. We will improve disposal procedures, consolidate responsibility for disposal, improve loss sharing mechanisms, and form a healthy and orderly financial governance system.