Insurance regulator decries pressure from boom

Business | Tereza Cai and Reuters 5 Jul 2019

Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, said insurance institutions have expanded fast in recent years and that has translated into pressure for officials who must check risks.

Liang said the regulator has seen problems like weak corporate governance, illegal use of funds, improper product innovations, misleading sales and false financial data.

And actions to tackle problems have mainly covered improving corporate governance, solvency, capital utilization, auto insurance, agricultural insurance and short-term health insurance.

Liang also said the regulator has stripped assets worth more than one trillion yuan (HK$1.13 trillion) from Anbang Insurance and intended to keep shrinking the insurer at a fast pace.

Zhou Liang, another vice-chairman, said the mainland saw new bank loans exceed nine trillion yuan in the first half, with a relatively stable non-performing loan ratio of 2 percent and a loan provision rate above 175 percent.

Zhou added that the idea is to increase medium- to long-term loans and credit loans to meet financing needs of manufacturers and to upgrade consumption trends. He also said the regulator has toughened penalties for violations of laws and regulations. The past two years has seen a total of six billion yuan levied - exceeding the sum of penalties for the previous 10 years - on more than 8,000 offenders.

Meanwhile, China's state-backed deposit insurance fund will start taking over Baoshang Bank's interbank debts from July 8. That comes as regulators tackle market jitters brought on by official action at the bank in May.

Sources cited a document as saying the deposit insurance fund incorporated by the People's Bank of China on May 29 will take over 150 interbank negotiable certificates of deposits issued by Baoshang before May 24 that mature after July 16. The NCDs are said to be worth 45.2 billion yuan.

The fund will act using ownership swaps, with the amount of guaranteed repayment based on previous agreements reached between creditors and the bank's takeover committee.

As for the yuan, Sheng Songcheng, a former director of PBoC's statistics and analysis department, said the currency should be stable at 6.87 against the US dollar in the short term.

The onshore yuan rose 132 basis points to 6.8701 per US dollar.

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