China’s banking regulator has ordered a midsize Chinese commercial bank to curb its lending for the final two months of this year, according to an internal bank memo seen by Dow Jones Newswires on Friday.(…)
A CBRC news official Friday denied that the regulator has issued such a notice.
It was unclear from the bank’s memo whether it had received a formal written notice from the regulator. The bank’s memo says the curbs "are political requirements and are not negotiable." According to the bank’s memo, the regulator told the bank that for November and December it cannot increase its outstanding loans from the level at the end of October.
The memo was shown to Dow Jones Newswires by a bank executive on the condition that his employer not be identified. It isn’t clear whether the regulator’s instruction is directed at the individual bank, which has had higher-than-average loan growth this year, or is part of a broader effort to control lending risks. Several executives at other Chinese banks said they hadn’t received similar orders.(…)
Regulators did quietly impose quantitative limits on lending in late 2007 to cool the economy, but were heavily criticized for the move later and, in any case, lending surged again in early January.(…)
China regulators regularly resort to oral "window guidance" to instruct individual banks or the industry as a whole to fall into line with official policy goals.(…)
The memo also says the bank must ensure its capital adequacy ratio doesn’t fall below 10%, the standard that CBRC has required since the fourth quarter of last year amid the global financial crisis.
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