Aug 24, 2009 02:59 PM

Regulator to Curb Banks' Cross-holding of Subordinated Debt

By staff reporters Fang Huilei, Zhang Man, Chen Huiying and Feng Zhe

(.com.cn) The China Banking Regulatory Commission has issued draft rules requiring commercial banks to deduct the full value of their holdings of subordinated bonds issued by other banks from their Tier-2 capital.

The rule will cover all existing subordinated bonds.

The move aims to reduce banks' reliance on subordinated bonds to supplement capital and ease the systemic risk of cross-holdings in the banking system, an analyst close to the CBRC said recently.

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