China’s efforts to resolve financial risks are slowed by the virus

by May 24, 2020Business0 comments

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BEIJING:- China’s efforts to resolve risks among high-risk financial institutions have been hampered by slower economic conditions caused by the outbreak of the new coronavirus, the head of a provincial central bank branch told Reuters.

The government dropped its annual growth target in its 2020 job report presented at the opening of the National People’s Congress on Friday, with Prime Minister Li Keqiang warning that financial risks are increasing in the world’s second-largest economy.

“The epidemic has affected past work in preventing financial risks,” said Xu Nuojin, head of the Zhengzhou branch of the People’s Bank of China in central Henan province.

“The pending risks could escalate and the new risks are taking shape,” Xu told Reuters in a telephone interview on Saturday on the sidelines of the annual meeting of parliament.

The regulators have cracked down on high-risk financial institutions to fend off systematic risks, most notably in the shock the government received from the then little-known Baoshang Bank last year.

Then the epidemic hit, causing China’s economy to contract for the first time in decades. The PBOC said on Saturday that regulators were extending their temporary custody of Baoshang, based in the northern region of China, Inner Mongolia, in six months. due to the epidemic.

“It is impossible to require that some of the financial institutions, which are already weak in health, operate normally during the shock of the epidemic,” Xu said.

“We have to implement more tolerant measures and extend the grace period appropriately by addressing risks.”

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In 2019, regulators also led the state bailouts of two midsize banks, the Jinzhou Bank and the Hengfeng Bank, hit by liquidity strains due to depositors’ concerns about asset quality and the state of stocks. local economies.

Xu said that local regulators and governments have made recent efforts to resolve the risks at Shengjing Bank backed by the Evergrande Group, based in the northeast province of Liaoning, and Pingdingshan Bank, a small lender in Henan.

“The financial risks will be resolved and avoided as the epidemic is brought under control,” Xu said.

“This theme will not change.” – Reuters

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