2011-02-21 13:28

China's banking regulator plans to require lenders to set up procedures to allow them to restore their finances in the event of a crisis, Bloomberg News reported Monday, citing a person with knowledge of the matter.

According to the report, banks deemed systemically important, including Industrial & Commercial Bank of China Ltd, may have to sell debt convertible into equity.

Meanwhile, broader powers will also be given to regulators in an effort to discover early risks, the report said.

"The regulator is incorporating a crisis mentality into its daily supervision of banks to make sure they have everything in place when big trouble comes," the report quoted Tang Yayun, a Shanghai- based analyst at Northeast Securities Co, as saying.

The country's major banks cut their combined bad-loan ratio to 1.15 percent as of Dec 31 from 17.2 percent in 2003, the report cited official data.

Bloomberg's source from the CBRC said that the regulator is studying the issue of self-rescue mechanisms.

The nation's five largest lenders, namely, ICBC, China Construction Bank Corp, Agricultural Bank of China Ltd, Bank of China Ltd and Bank of Communications Co, are currently designated as systemically important by the Chinese government, the source told the news agency.