China’s banking regulator is organising a nationwide training programme to enhance risk awareness among its senior bankers to help contain a surge in bad loans and support its economic recovery efforts.
About 500 senior officials from the mainland’s Big Four lenders, policy banks to rural co-operatives will take lessons on how to detect and assess risks, and adopt new digital technologies to improve efficiency, a top official said.
“The training aims to bring risk management in the financial industry to fruition,” said Zhao Changyi, a leading financial risk management expert who also heads the initiative sponsored by the China Banking and Insurance Regulatory Commission (CBIRC). “Financial stability will lay a solid foundation for a healthy economic order.”
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
The training will help senior bankers hone their skills in risk controls, as regulators keep a close watch on rising non-performing loans. Chinese banks’ profits fell by 24 per cent last quarter amid the Covid-19 crisis. Bad loans rose for a sixth quarter to 2.7 trillion yuan (US$395 billion), or 1.94 per cent of all lending, CBIRC said last month.
The authorities are concerned the pandemic that has crushed many businesses in the economy would push businesses into the shadow banking world, or peer-to-peer (P2P) lenders for quick but often expensive loans to ease their credit crunch.
The CBIRC cracked down on the P2P lending sector four years ago after it mushroomed along with the rising popularity of fintech platforms. The commission would never lower its guard against P2P malpractices, chairman Guo Shuqing has warned.
Referring to the pandemic, Guo in August said the “black swan” event would inevitably cause asset quality to deteriorate while a slight relaxation of regulation could lead to a resurgence of malpractices and irregularities at financial institutions.
“Due to the pandemic, gearing is set to rebound significantly in the economy this year, and bad debts of financial institutions may rise sharply,” Guo wrote in an article published in Qiushi, a Communist Party journal.
In the three-day training programme, the senior bankers can access lectures by CBIRC officials. The nation’s top risk management professionals such as Liu Ruixia, chief risk expert with the China Banking Association, would also lend a hand.
China’s regulators break down Xiao Jianhua’s financial empire, seizing Tomorrow Group’s insurers, trust firms and brokers
At the same time, China has launched a training initiative, known as International Financial Risk Officer Programme, which includes long-term studies and examinations to develop more financial risk and compliance professionals.
Zhao said senior local bankers were also advised to create a sound and complete framework on data management to reinforce the industry’s digitalisation campaign.
“Creation of a strong data monitoring system within a bank paves a way for improved capabilities in risk management,” he added. “Strengthened risk management eventually ensure sustainable growth.”
More from South China Morning Post:
- China’s top banks swamped by wave of Covid-19 related bad loans see pandemic casting shadow on full-year profits
- China’s top bank regulator sees surge of bad loans straining financial system in 2020, 2021
- China warned to prepare for ‘big rise’ in bad loans as financial system braces against coronavirus, rising global tensions
- China’s regulators break down Xiao Jianhua’s financial empire, seizing Tomorrow Group’s insurers, trust firms and brokers
- China’s regulators to support smaller banks to limit financial contagion from burgeoning bad debt, PwC says