New securities chief faces challenge in restoring confidence

 

Profile: Liu Shiyu

Liu Shiyu, the new chairman of the China Securities Regulatory Commission, is a banking sector veteran.

He has spent 18 of his 29 working years at the People's Bank of China, the central bank.

Liu rose to become deputy governor of the bank from 2006 until he left in late 2014 to head the Agricultural Bank of China, the country's third-largest commercial lender by assets.

Beijing-based Caixin Media, citing central bank sources, said the 54-year-old is highly intelligent and good at balancing and coordinating the interests of various parties both inside and outside the PBOC.

The sources said he is a diligent worker who often reads late into the night and is a fast learner in areas that he is not familiar with.

Liu impressed market participants by responding professionally several times to disputes over different aspects of financial reform, rather than avoiding controversies.

During his term as deputy governor of the central bank, he commented many times on the Chinese stock market.

In May 2014, the State Council introduced a guideline aimed at boosting healthy development of the capital market.

Liu said building a multilayered capital market was key to solving various market problems and that China needed to expand capital market financing instead of relying solely on refinancing. This refers to the refunding or restructuring of debt with new debt, equity or a combination of both.

He said China should make a firm decision to straighten out the interbank and wealth management businesses to avoid investors pursuing short-term, high profits.

In December 2011, Liu said the development of the debt and stock markets would be hindered if innovative products such as credit default swaps were not developed.

He said that, in particular, the financing capacity of the real economy would be weakened if listed banks raised funds from the stock market under pressure to replenish capital.

On the other hand, he said asset-backed securitization might help commercial banks to lower risk and reduce capital consumption.

In December 2007, Liu said some commercial banks were still making loans against regulations and that these loans were flowing largely into the stock and housing markets, increasing bubbles in both.

Liu was born in Guanyun county in Lianyungang, Jiangsu province. He holds a master's degree from Tsinghua University's School of Economics and Management.

Paul Welitzkin in New York and Fu Jing in London contributed to this story.