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UPDATE 1-China c.bank asking Shanghai lenders if tighter rules impacting credit quality -sources
June 14, 2017 / 8:02 AM / 4 months ago

UPDATE 1-China c.bank asking Shanghai lenders if tighter rules impacting credit quality -sources

* PBOC asks Shanghai banks for asset quality, credit report

* Banks include CDB, BoC and AgBank, sources say

* Request comes as banks prepare for routine quarterly assessment (Adds names of banks impacted, context)

SHANGHAI, June 14 (Reuters) - China’s central bank is asking lenders in Shanghai for information on how recent regulatory tightening is effecting their lending and credit quality, two people with direct knowledge of the matter said on Wednesday.

The recent request is in addition to information Chinese banks must provide for the central bank’s quarterly risk assessment, known as MPA.

Banks in Shanghai recently received a notice from the People’s Bank of China (PBOC) asking them to provide the current size and industry distribution of their loan portfolio and report on how new loans in 2017’s first half compared to a year earlier, the two said.

The Shanghai office of the PBOC also requested information on any impact the increased regulatory scrutiny has had on new loans, off-balance-sheet assets and the movement of assets from off-balance-sheet to on-balance-sheet, they added.

The PBOC was not immediately available for comment.

The banks notified include China Development Bank, Postal Savings Bank of China, Bank of Shanghai, Shanghai Pudong Development Bank, Agricultural Bank of China and Bank of China among others, according to the two people.

None of the banks responded immediately to a request for comment.

TOUGHER SCRUTINY

The notice was sent at a time Chinese banks have been preparing for the Macroprudential Assessments (MPA) the central bank conducts for all lenders.

China’s banks have come under tougher regulatory scrutiny since the beginning of this year after the banking regulator released a slew of requests for self-inspections on matters ranging from credit risk to compliance.

Though the tighter regulations have so far mainly been aimed at tamping down speculative activity and riskier forms of lending, many analysts believe they will eventually lead to higher financing costs for companies and drag on economic growth.

Fund managers surveyed by BofA Merrill Lynch said Chinese credit tightening ranked as the top “tail risk” for investors in June, for the second straight month (31 percent), with 61 percent of investors saying tighter Chinese monetary policy will slow the economy but have little impact on global growth.

According to the people knowledgeable about the PBOC Shanghai notice, it asked banks there whether bond issues have had an impact on credit needs and whether enterprises having difficulties issuing bonds have pivoted to borrowing, the people said.

In addition, the PBOC wants to know about the impact policy changes have had on loans to developers and mortgages, the people added. (Reporting by Li Zheng and Engen Tham in Shanghai; Editing by Richard Borsuk)

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