Risk warning system for banks unveiled By Zhao Renfeng (China Daily) Updated: 2005-04-22 08:42
China's banking regulator yesterday announced it would set up a risk warning
system for the nation's banks, in a fresh move to fight banking irregularities
and reduce risks posed to the sector.
The launch of the new system, which follows a series of risk-control measures
taken by the China Banking Regulatory Commission (CBRC), confirmed the
regulator's resolve to strengthen the supervision and management of the banking
industry - widely considered as one of the weak links in China's booming
economy.
According to a statement released yesterday on the regulator's website, the
CBRC has established risk-warning operation guidelines for commercial banks and
installed computer systems to automatically detect wrongdoing and risks.
The new system is expected to help the regulator better monitor the
performance of banks and spot banking loopholes so that necessary measures can
be taken to avoid future problems.
A series of criminal cases tarnishing the image of the sector have emerged in
recent months, pushing the industry into formulating such a mechanism.
The risk-warning system, according to the CBRC, collects important data about
banks' capital adequacy ratios, credit risk, market risk, operational risk and
liquidity risk.
It is also capable of qualitative analysis on banks' corporate governance,
operational environment and their risk-managing and reduction capability.
The CBRC will launch the pilot operation of the scheme in all banks operating
in China, which include State-owned commercial banks, shareholding banks, city
commercial banks, as well as joint venture and foreign banks.
