Featured Product

    CBIRC Consults on Measures for Classification of Asset Risks of Banks

    April 30, 2019

    CBIRC launched a consultation on the draft interim measures for the classification of financial asset risks of commercial banks in China. The comment period for this consultation ends on May 31, 2019. The Interim Measures extend the risk classification from loans to all financial assets that bear credit risk and propose non-credit assets with credit impairment as the core classification requirement, especially for the classification of asset management products.

    Compared with the current "Guidelines" on asset risk classification, the "Interim Measures" expand the scope of asset risk classification, propose a new core definition of risk classification, emphasize the debtor-centered classification concept, clearly define the number of overdue days as an objective indicator of risk classification, and provide risk classification requirements for restructuring assets. Additionally, the "Interim Measures" put forward systematic requirements for commercial banks to strengthen risk classification management and clarify the relevant requirements for supervision and management. 

    As per the new measures, commercial banks are required to improve the risk classification governance structure, formulate risk classification management systems, clarify classification methods, processes and frequencies, develop and improve information systems, and strengthen monitoring and analysis, information disclosure, and document managementAfter the implementation of the Interim Measures, claims overdue for more than 90 days, even if the mortgage guarantee is sufficient, should be classified as bad. Considering the severity of the risks reflected by the non-retail debtor overdue for more than 90 days, the bank should categorize its debt as bad if the debtor’s debt overdue for more than 90 days in all banks’ debts has exceeded 5%. In addition, if loans are overdue for more than 270 days, they should be classified as at least suspicious. If overdue for more than 360 days, they should be classified as loss. 

    As per the CBIRC notification, credit risk is the most important risk faced by the banking industry in China and a sound risk classification system is the prerequisite for effective prevention and control of credit risk. These measures replace the existing guidelines on this topic while drawing on the latest international requirements and keeping in mind the domestic regulatory practices. These measures are also cognizant of the BCBS guidelines, from 2017, for careful handling of assets (Definitions of Adverse Exposure and Regulatory Tolerance); these BCBS guidelines clarified the criteria and classification requirements for non-performing assets and restructured assets to enhance the consistency of the global banking asset risk classification criteria.

     

    Related Links (in Chinese)

    Comment Due Date: May 31, 2019

    Keywords: Asia Pacific, China, Banking, Credit Risk, NPLs, Interim Measures, Classification of Impairments, 90 Days Overdue, Asset Risk Classification, CBIRC

    Related Articles
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571