Banking Regulator Sets Higher Provision Requirements

(Beijing) - China's banking regulator has released a standard for categorizing loans issued to local government financing platforms (LGFP) and corresponding provision requirements for those loans.

"Higher provision requirements over risky loans will lower the capital adequacy ratio of banks by 0.5 percentage point," said a senior bank analyst. However, banks still have two to three years to meet the standard and therefore it will not trigger a new wave of capital-raising.