Banking Regulator Targets Interbank Market
“Last week, the bank felt particularly turbulent, the CBRC documents came one after another.” A large city firms with the Department of the same side of the assets of investment pool Chen pool (a pseudonym) on the first financial reporter lamented. A brokerage researcher also complained – the speed of his writing can not catch the speed of the documents.
In particular, the “Notice on the Prevention and Control of Banking Risk” (No. 6) and the Notice on the Special Arrangement of Supervision, Arbitrage and Concession Arbitrage in the Banking Industry (No. 46) Express means the same industry. The former clearly pointed out that “the supervision of interbank deposit orders faster growth, interbank deposit accounted for a higher proportion of interbank debt banks, reasonable control of interbank deposit and other industry financing scale”; the latter is listed at least five kinds of phenomena, part of the same industry “Regulatory arbitrage” and “peanut arbitrage” two hats.
“The line is waiting for regulators for the same industry deposit issued a formal regulatory directive, after the rumors of interbank deposits may be included in the same industry debt assessment.” Chen Chi told reporters. The proportion of interbank liabilities in the total liabilities of the bank shall not exceed 33%, and the interbank deposit does not constitute the same industry liability and is not subject to supervision. At the same time, the interbank deposit period is often shorter, and the bank’s long-term investment in the end of the formation of a period of mismatch. Coupled with some of the same industry funds through the purchase of interbank wealth into the bond market, last year’s debt market turmoil exacerbated the systemic financial risks.
“At present, many banks are still issuing a large number of interbank deposits, used to make a large pool of funds, but the future supervision of the trend, the circulation rate will likely down, after all, the subject of the same industry financial circulation has been shrinkage this year.” But Chen pool and Many practitioners still believe that the problem caused by the heavy volume in the same industry is the phenomenon rather than the nature, there are signs of “demonization”.
“The liability department has convened several meetings specific to this circular and what we are concerned about is liquidity management. After all, regulators have included wealth management and investment with negotiable certificates of deposit (NCD) into idle arbitrage. It is foreseeable that issuance scale of NCDs will surely decline. The regulator wants to slash the scale of off-balance-sheet wealth management products (WMPs) but don’t bear liabilities through NCD. In my opinion, whether the regulator should cut reserve requirement ratio (RRR) in next step?” A head from asset and liabilities management department of a bank told a journalist of Securities Times.
China’s banking regulator has told lenders to conduct checks on improper trading, incentives, innovation and charges, according to a document seen by Reuters. The move is the latest in a flurry of orders from the regulator after Guo Shuqing took the helm of the China Banking Regulatory Commission (CBRC) in February.