New Capital Rules Bring China's Banking Regulation up to Global Standards
An important step forward, China modernizes its commercial banks by ensuring a sound financial position through the newly issued measurable capital adequacy standards.
Date:
April 2004
Keywords (click to search): [Bank capital adequacy standard] [PRC commercial bank credit management] [China Banking Regulatory Commission] [CBRC] [Basel Capital Accord] [Basel Accord] [Basel I] [Basel II] [Basel 1]
By Michael G. DeSombre and Weiheng Chen, Sullivan & Cromwell LLP, Hong Kong
On February 23 2004, the China Banking Regulatory Commission (the CBRC) fulfilled its promise1 to modernize its capital adequacy standards by promulgating the Administration of Capital Adequacy Ratios of Commercial Banks Procedures (the Capital Adequacy Procedures, or the Procedures) after approval by the State Council. The Capital Adequacy Procedures, the first regulations in China to set forth the precise mechanism for calculating capital for commercial banks, are based on the 1988 version of the Basel Capital Accord (Basel I) but also draw on the proposed new Basel Capital Accord (Basel II).2 The Procedures have also been drafted in light of China's commitments under the WTO to open its commercial banking sector to foreign competition by January 1 2007.
Since its promulgation in 1995, the PRC Commercial Banking Law (the Commercial Banking Law) has required all commercial banks...
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