In Depth: What China’s New Capital Rules Mean for Banks

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 (商业银行资本管理办法), 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, in order to simplify compliance for smaller lenders.