On November 1st, the State Administration of Financial Supervision and Administration of China released the "Capital Management Measures for Commercial Banks", which revised the "Capital Management Measures for Commercial Banks (Trial)" released in 2012 and will be officially implemented from January 1st next year. In order to implement the spirit of the Central Financial Work Conference and comprehensively strengthen financial supervision, the State Administration of Financial Supervision has revised the "Capital Management Measures for Commercial Banks (Trial)" issued in 2012. The relevant person in charge of the State Administration of Financial Supervision introduced that with the changes in China's economic and financial situation and risk characteristics of commercial banks, capital supervision also faces some new problems. In addition, there have been significant changes in international regulatory rules. Specifically, the revised Capital Measures have constructed a differentiated capital supervision system, dividing banks into three levels based on scale and business complexity, and matching them with different capital supervision plans. There are a large number of commercial banks in China, with significant differences between banks. There are both globally important banks with complex business operations that serve both domestic and international systems, as well as small county-level banks that only handle traditional deposit and loan business. "Tian Jimin, General Manager of Risk Management Department of Agricultural Bank of China, introduced that the new measures make capital regulation more suitable for the scale and complexity of banks. Among them, banks with larger scale or more cross-border business are classified as the first tier, and international rules for capital regulation are applied, such as large banks, joint-stock banks, and urban commercial banks and rural commercial banks with assets exceeding 500 billion yuan; Banks with smaller scale and less cross-border business are classified as second tier, implementing relatively simplified regulatory rules, including most urban commercial banks and rural commercial banks with asset sizes below 500 billion yuan; Smaller banks with no cross-border business have been classified into the third tier, such as small rural commercial banks and village banks. For such banks, capital measurement requirements have been further simplified to guide them to focus on county-level and small and micro financial services. It is worth noting that differentiated capital regulation has not lowered capital requirements, but rather stimulated the financial vitality of small and medium-sized banks while maintaining the overall stability of the banking industry, reducing their compliance costs, "said the person in charge of the State Administration of Financial Supervision. The Capital Measures have also comprehensively revised the measurement rules for risk weighted assets to enhance the risk sensitivity of capital measurement. For example, for mortgage loans in real estate risk exposure, the Capital Measures set multiple risk weights based on property type, repayment source, and loan to value ratio (LTV). This will promote banks to use capital more scientifically and reasonably, restrain and suppress real estate speculation, and better meet reasonable housing needs, "said Wang Lipeng, Assistant President, Chief Financial Officer, and Secretary of the Board of Directors of WeBank. Next, commercial banks should take the implementation of new measures as an opportunity to develop practical and feasible capital plans, further leverage the role of capital regulation as a 'baton' for resource allocation, optimize the total amount and structure of assets, reasonably promote capital conservation, and guide funds to invest in sustainable and high-quality real economy sectors. Tian Jimin stated that commercial banks should also further improve their data models and information systems, Expand the breadth and depth of data applications. (New News Agency)
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：economic daily
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