China’s financial regulators seek to impose additional capital requirements on its most important banks to curb risks and safeguard stability, according to Yahoo! finance. The banks will be put into five categories and face a surcharge of between 0.25% and 1.5% on top of the mandatory capital adequacy ratios.
The target banks, considered too big to fail, will also be required to make detailed plans on how to recover from a crisis.
The lenders will be mandated to draft living wills with disposal plans in case they can’t operate as an ongoing entity.
The banks will be scored by their interconnectedness with other financial institutions and the complexity of businesses such as derivatives and wealth management operations.
Although the move by regulators will bolster the strength of China’s biggest banks, it is expected to widen the funding gap at some lenders.
The draft rules are pending public feedback until May 1.
The stocks of China’s top banks are currently declining. 601398: SHA is down 1.45%, 601988: SHA is down 0.60%, 601939: SHA is down 1.2%, 601288: SHA is down 0.89%
