PBOC is said to ease bank capital rule to boost loan growth

[BEIJING] Some Chinese banks have received notice from regulators that a specific capital requirement will be eased in order to support lending, as the authorities try to mitigate increasing risks to the economy from the trade war.

The People's Bank of China told some institutions Wednesday that the so-called "structural parameter" in the Macro-Prudential Assessment of their balance sheets will be lowered by around 0.5 points, reducing required capital buffers, according to people familiar with the matter.

The PBOC said in the notice that the change is being made to support local financial institutions in meeting credit demand effectively, the people said, asking not to be identified as the matter isn't public. The central bank didn't immediately respond to request for comment outside business hours Wednesday.

As China faces the negative economic effects of higher tariffs on trade with the US at a time when the economy is already slowing, policy makers are rolling out multiple measures to ensure credit supply and bolster investment. The central bank specified that the capital-buffer reduction is a counter-cyclical adjustment in reaction to rising uncertainty over trade.

The PBOC offered a record amount of Medium-term Lending Facility loans earlier this week and has cut reserve-requirement ratios three times this year.

BLOOMBERG