Welcoming Remarks

at the 16^th Meeting of IBFed Financial Market Working Group

YANG Zaiping

Executive Vice President of China Banking Association

May 18, 2012

    Honored Chairman Pierrre de Lauzun, Mr.Wim Mijs, Ms. Sally Scutt, Distinguished guests, Ladies and Gentlemen,
    Good morning.
    I'm very glad to have this opportunity, being a host and co-organizer, to join in today's meeting. Please allow me, on behalf of China Banking Association, to extend the heartly welcome to you all to Beijing. 
    Facing the latest global financial crisis and debt crisis, the financial market is still in turmoil, the economic recovery in developed countries remains uncertain, new-emerging economies are struggling with structural adjustment and transitional pressure. At this stage, the whole world needs to focus on and think about how to build a more robust banking system, both safe and efficient, to better promote sustainable economic development.
    Having weathered the shocks from the financial woe in past several years, the Chinese banking sector makes more efforts to reinforce risk resilience, and underpin financial services to the real economy, especially the support for SMEs and agro-credit.
    Let me share you some statistics , I hope, with which, you could have a general picture of the latest Chinese banking sector.
    At the end of 2011, the banking assets totaled RMB 113.28 trillion, with the ROE of 19.2%, the ROA of 1.2%. The weighted-average capital adequacy ratio increased to 12.7%, with the core CAR being 10.2%.In the meantime, the stock and ratio of non-performing loans in commercial banks declined dramatically to RMB 427.9 billion and 1% respectively, while the provisioning coverage ratio of commercial banks soared to 278.1%.
    From 2009, the regulatory authority asked all commercial banks to set up special SME credit service franchises to support SMEs. The past three years witnessed that the growth rate of SME loans kept no less than that of total loans, the increment continued no less than that in the previous year. By the end of 2011, the loan balance to SMEs amounted to RMB 10.8 trillion, accounting for 20% of the total loan balance. The quality of SME loans continuously improved. The non-performing loans decreased by RMB 43.5 billion to RMB 210.7 billion, with the rate being 2.02%, 0.95% lower from the year beginning.
    Regarding the prudential supervision in China, the regulatory authorities intensified the implementation of a series of improved regulatory standards based on the good international practices and the domestic realities.
    First is to enhance capital adequacy ratios (CAR) and introduce counter-cyclical capital regulation. The core tier one CAR, the tier one CAR and the CAR are required not less than 5%, 6% and 8%.The retention of excess capital is set at 2.5% and the counter cyclical excess capital is 0-2.5%.Furthermore, domestically-defined SIFIs are required additional capital surcharge, which is tentatively set at 1%. Therefore, being compliant with the new standards, the SIFIs and non-SIFIs' capital adequacy ratio are not less than 11.5% and 10.5% respectively.
    Second is to introduce the leverage ratio, requiring tier one capital of adjusted on-balance-sheet assets not less than 4%.
    Third is to have in place a multi-dimensional liquidity risk monitoring system by adding two new concepts of liquidity coverage ratio and net stable funding ratio to the existing supervisory standards like loan to deposit ratio.
    Last but not least is to set the loan provisioning ratio not less than 2.5% and provisioning coverage ratio not less than 150%. 
    Since we'll have 2 senior officials from People's Bank of China, China Banking Regulatory Commission and 1 expert from Securities Association of China to join us in this afternoon as our guest speakers, who, I believe, will touch upon financial markets in China from more detailed and different aspects. Now here,I just keep my introduction short and simple.
    I think all of us agree that, with the full support of the IBFed board, the Financial Markets Working Group has served as an important and active task force to join in the global critical discussions on major regulatory reform, especially of those most highlighted and concerned areas, such as shadow banking, dark liquidity, FATCA ,Volcker Rule and Dodd-Frank Swaps Regulation etc. Over the same time, the working group has done a remarkable job on establishing excellent cooperative relationship and dialogues with those influential international organizations,namely the G20, FSB, IOSCO and so on.
    We CBA, as an associate member of IBFed, are willing to continuously strengthen communication and cooperation within the working group and with the other international peer associations. We will take this meeting as a good start to seek for further cooperation and participation to make more contributions to the IBFed, and the global banking community as a whole.
    Finally,  I whish the meeting a complete success ! Thank you.