Stress tests toughened for Chinese banks
Updated: 2011-04-21 17:29
By Song Jingli (chinadaily.com.cn)
The China Banking Regulatory Commission (CBRC) has begun to stress-test lenders more strictly, the 21st Business Herald reported Wednesday.
Commercial bank sources told the paper that the CBRC has requested each bank to present the changing scenarios of property loans under different levels of risks from the end of this month to the beginning of next month.
Beijing, Shanghai, Shenzhen, Guangzhou, Chongqing, Hangzhou and Nanjing are high-risk areas.
For other areas, lenders will be stress-tested under a 10 percent fall in housing prices with a hike of 27 basis points in interest rates, a 20 percent fall in housing prices with a hike of 54 basis points in interest rates and a 30 percent fall in housing prices with a hike of 108 basis points in interest rates.
Unnamed bank employees told 21st Business Herald that it was necessary to have a new round of tests since property prices have begun falling in several cities and interest rates have been raised several times. But they said that the likelihood of the worst-case scenario is very low.
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