By Shangguan Zhoudong (Chinadaily.com.cn)
Updated: 2007-07-26 17:13

Policy banks are not allowed to have a capital adequacy ratio (CAR) below 8 percent, the rule that applies to commercial banks, according to a revised management measure issued by the China Banking Regulatory Commission (CBRC) yesterday, Shanghai Securities News reported today.

Inadequate CAR is a common problem for China's three policy banks. Statistics show that by the end of 2006, the CAR at China's State Development Bank stood at 8.05 percent, down from 9.15 percent at the end of 2005.

At the end of 2006, the CAR at Agricultural Development Bank of China was only 6.27 percent.

Although another policy bank, the Export-Import Bank of China, hasn't announced its CAR in its annual report, insiders pointed out that the bank's CAR stood at a low level in light of its business scale and 5 billion yuan in original capital.

In recent years, policy bankers and insiders have been calling on the government to inject capital to these capital banks to improve the CAR level.

Internationally, the Basel Convention set no bottom limit on policy banks' CAR, but the CAR of policy banks should be higher than that of commercial banks in general.

The revised measure set no requirements for policy banks' CAR disclosure.