China to enhance scrutiny on banks

China will step up oversight in the banking sector this year to reduce financial risks, the banking regulator said, stressing that long-term efforts would be needed to control banking sector chaos.

The China Banking Regulatory Commission said late on Saturday in a statement that its priorities included enhancing supervision over shadow banking and interbank activities.

“Banking shareholder management, corporate governance and risk control mechanisms are still relatively weak, and root causes creating market chaos have not fundamentally changed,” the CBRC said.

“Bringing the banking sector under control will be long-term, arduous, and complex,” it said.

The CBRC said stricter punishment will be imposed for violating corporate governance, property loans, and disposal of non-performing assets, and that it would strengthen risk control in interbank activities, financial products and off-balance sheet business.

China has repeatedly vowed to clean up disorder in its banking system.

In recent months, regulators have introduced a series of new measures aimed at controlling risk and leverage in the financial system, with everything from lending practices to shadow banking under the microscope.

In January, the CBRC published regulations that cap the number of commercial banks that single investors can have major holdings in.