What China's new capital rules mean for banks on risk exposure

Regulations take effect Jan. 1, aligning the country with global standards

20231215 Caixin bank image

China's regulators don't expect the new rules to lead to significant changes in banks' balance sheets overall.

FAN QIANCHAN, ZHANG YUZHE, QUAN YUE and ZHANG YUKUN, Caixin

New rules for China's banks to determine their risk exposure and capital requirements are slated to go into effect on Jan. 1, as regulators bring the country's banking system into line with the latest international standards set by the Basel Committee on Banking Supervision (BCBS).

The final regulations on managing commercial banks' capital, released on Nov. 1, are the first comprehensive update to bank capital rules since 2012. Some metrics for calculating lenders' risk-weighted assets (RWAs) have been relaxed from the draft version published in February. But regulators made no changes to rules in the draft setting up a system of differentiated requirements based on a bank's size to simplify compliance for smaller lenders.

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