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China banking regulator warns lenders to curb growing risks: Caixin

[BEIJING] China's top banking regulator has told commercial lenders they will need to inject capital, restructure or even shuffle senior executives if they miss regulatory targets, local media Caixin reported on Wednesday.

Shang Fulin, chairman of the China Banking Regulatory Commission (CBRC), told bank executives at a recent internal meeting to pay special attention to key ratios, including provisioning ratios, Tier One and other capital adequacy ratios, which measure banks' capability to absorb potential losses from its bad loans, Caixin reported.

If ratios worsen below reasonable levels, banks will be required to take measures so as to not cause systematic risks, according to the Caixin report.

The measures would include injecting new capital, restructuring and even changing senior management, Caixin added, without naming the source of the information.

CBRC could not be immediately reached for a comment outside normal business hours.

This comes on the heels of news that new non-performing loans (NPLs) held by Chinese banks had more than doubled in 2015 from the previous year.

NPLs at Chinese commercial banks grew 36 per cent to 1.95 trillion yuan (US$296.52 billion) during 2015, representing 17 consecutive quarters of increase. The banking sector's NPL ratio rose to 1.59 per cent at the end of last September, the highest since the global financial crisis.