China regulator to tighten supervision over shadow banking

<p>China’s banking regulator said it will further tighten supervision over the shadow banking sector and vowed to expand loans and cap borrowing costs.</p>

China's banking regulator said today (June 6th) it will further tighten supervision over the shadow banking sector, which regroups financial institutions that act like banks, but are not subject to the restrictions of bank regulation.

The China Banking Regulatory Commission (CBRC) also vowed to expand loans and cap borrowing costs in a bid to boost the supply of funds to the real economy, as the country's economy is showing signs of a slow down.

It will continue to support buyers of affordable housing, first-time home buyers and small-and medium-sized businesses.

CBRC's vice-president Wang Zhaoxing told a news conference that the regulator will improve ways to manage deposit-to-loan ratios, an indicator of a bank's ability to absorb risk and classify bad loans.

Industrial & Commercial Bank of China shares fell 0.2 per cent at the close of trading in Hong Kong, while China Construction Bank Corp lost 1.4 per cent and Bank of China slid 2.2 per cent. 

The yuan climbed the most in a week in onshore and offshore trading as the People’s Bank of China raised its reference rate by 0.14 per cent to 6.1623 per dollar.

Learn about the Asian markets and CFD trading at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.