China’s shadow banking sector shrank by 29 trillion yuan from peak, said official
China’s shadow banking sector shrank by 29 trillion yuan from peak, said official

China’s shadow banking sector shrank by 29 trillion yuan from peak, said official

 

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The assets and risks of China’s “shadow” banking sector have declined significantly through continuous regulation, reported the state-run Securities Times on Saturday, citing Liang Tao, vice chairman of China Banking and Insurance Regulatory Commission (CBIRC).

As of the end of June, the sector has shrank by more than 29 trillion yuan ($4.3 trillion) from its historical high, Liang said at an industry forum, without specifying the peak volume. China has been clamping down on shadow banking in recent years in a bid to reduce hidden risks in the high volume of complex and risky loans in the sector.

The CBIRC will step up on-site inspection on shadow banking and cross financial business and hold those violating regulations accountable, he said.

However, Liang warned of high hidden risks as some products have complex structure and high leverage levels.

“Some banks’ management of their non-standard investment on the balance sheet was insufficient and the asset classification and the standards for provisions for that business are significantly lower than those for on-balance sheet loans,” he said.

“People should be vigilant of a rebound of shadow banking risks as some institutions may use improper financial innovations to create new variants of shadow banking.”