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China toughens loss-absorbing capacity rules for systemically important banks -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – Face masks are worn by people walking past People’s Bank of China’s headquarters, April 4, 2020. REUTERS/Tingshu Wang

BEIJING, (Reuters) – China has published regulations requiring its systematically significant banks to increase their capacity to absorb losses in order to prevent financial instability.

The four largest state-owned lenders in China must reach specific loss-absorbing capacities (TLACs) by 2025, according to the People’s Bank of China and China Banking and Insurance Regulatory Commission.

They stated that the move was intended to improve the risk-disposal system at large Chinese lenders and control irrational expansion of business, as well as curb the accumulation of systemic threats.

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