Regulator: Risks in smaller banks under control

China's small and medium-sized banks are running smoothly with relatively ample liquidity, and their overall risks are under control, the country's banking and insurance regulator said on Sunday.

Although a few small and medium-sized banks failed to publish their annual reports on time, those were all special cases. Some of them are still in the middle of equity restructuring; some are preparing for listing on the stock exchange; and some have not yet completed audit procedures due to change of auditor, according to the regulator.

They have reported their situations to regulatory authorities, who will urge the agencies concerned to speed up the audit so that the banks will release their financial results as soon as possible, the China Banking and Insurance Regulatory Commission said in an interview with Financial News, a publication run by the People's Bank of China, the central bank.

The commission said it will continue to support small and medium-sized banks to focus on their main business, increase policy support for them to proactively solve development problems, and promote their high-quality development.

Recently, the State Council's Financial Stability and Development Committee held a meeting at which large State-owned banks and smaller joint-stock commercial banks said they would maintain a stable size of the interbank business with other small and medium-sized banks, in an effort to maintain market order.

The central bank said on Sunday it will use various monetary policy instruments to maintain a reasonable and adequate level of financial market liquidity, in addition to providing targeted liquidity support for small and medium-sized banks.

"Generally speaking, small and medium-sized banks still have adequate capital and liquidity. Their overall risks are under control," said Wen Bin, a researcher at China Minsheng Banking Corp.

A few financial institutions, however, were experiencing liquidity and credit risks due to blind expansion, excessive financial leverage and poor risk management, he added.

"But there is no need to be overly anxious about the risks as China has a deposit insurance plan. By taking measures such as appointing another bank to temporarily manage the bank amid a merger and acquisition process, regulatory authorities will help small and medium-sized banks make a smooth transition of liquidity," he said.