What’s new: Vice Premier Liu He on Thursday urged regulators to strengthen oversight of regional financial institutions, including their shareholders, risk concentration and affiliate transactions.
Liu made the remarks at a meeting (link in Chinese) of the State Council’s Financial Stability and Development Committee, the country’s high-level financial regulator.
Liu directed regional financial institutions to focus on serving local businesses and refrain from relentlessly concentrating on growth. He also warned about problems in some institutions’ governance and outside supervision.
The context: Over the past few years financial regulators have found risks and corruption scandals in some regional lenders, as some banks have rapidly expanded credit and failed to rein in the illegal behavior of some shareholders and managers, which has led to a large increase in nonperforming loans on their books.
Some local lenders have been punished or restructured, while some bank managers and local financial regulatory officials involved in scandals have been put under investigation.
Related: Rural Bank Targeted in Regulator’s Crackdown on Risk
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)
