Banks to speed up disposal of NPLs
By Sun Min (China Daily)
Updated: 2004-07-30 09:52

China's Big Four State-owned banks are being urged to speed up the disposal of non-performing loans and internal reforms to improve efficiency and corporate governance.

Lowering existing non-performing loans, or NPLs, and avoiding new ones are one of the priorities for the four banks in the second half of the year, said banking watchdog China Banking Regulatory Commission (CBRC) in a half-year work conference of the Big Four yesterday in Beijing.

They are encouraged to innovate the way they dispose of bad loans and accelerate the process.

Deeper comprehensive reforms are also expected to take place at the four banks, namely, China Construction Bank, Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China, during the rest of the year.

The first two, in the middle of restructuring to prepare for a public listings, are to further the reform of corporate governance construction while the other two banks are also expected to pace up internal reform to get ready for similar moves in the future.

Meanwhile, to exert their role in the State macro-economic management, the State banks are also required to set up a scientific and appropriate loan risk management scheme and upgrade the overall efficiency of the lending policy.

The State banks have taken some new measures and adopted new ideologies in macro-economic management, which has achieved fruitful results in the first half of the year, CBRC said in a release yesterday.

The fast investment growth has been kept under control while the credit growth has also slowed down.

But some unstable factors still exist and the financial sector also has encountered new problems, so the State banks should continue to follow the macro policy and take effective measures to ensure a smooth operation of the financial system in the second half of the year.

Instead of blindly pressing the loan supply, they should treat different cases and clients according to the practical situation.

When setting strict criteria for loan borrowers, the banks should also provide appropriate lending to enterprises and projects with good market demand, business efficiency and employment opportunities as well as those that fit the market entry standard in their industries.

Meanwhile, international rating agency Standard & Poor's raised the long-term foreign currency counterpart credit ratings on the Bank of China and China Construction Bank to BBB- from BB- yesterday.

The outlook on the long-term ratings on both banks is stable, it said. The new ratings reflect a positive response to the recent government support to the banks via capital injections, their sales of problem loans as well as reform initiatives.

At the same time, the Industrial and Commercial Bank of China also had its outlook revised to positive from stable by Standard & Poor's, on expectation of more government support to the bank in the medium term.

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