* Regulator reiterates efforts to control loans to LGFVs
* CBRC vows to ensure credit flows to real economy
(Adds regulator comments)
BEIJING, April 24 China will heighten oversight
on wealth management products in 2013 by taking a closer look at
money flows off banks' balance sheets to reduce financial risks
at a time when growth is slowing in the world's No. 2 economy.
The China Banking Regulatory Commission (CBRC) also said on
Wednesday it remained committed to cutting risks from loans to
local government financing vehicles (LGFVs) this year, but
stopped short of any detailed action.
"We will increase regulation on the structure and sales of
wealth management products and keep monitoring where the money
is channelled," the CBRC said in its latest annual report.
Last month the regulator ordered banks to strengthen checks
on the underlying assets of a range of wealth management
products, and limited such assets to 35 percent of banks' total
outstanding wealth management products, or 4 percent of their
total assets, whichever is lower.
Market concerns and regulators' warnings over risks in
China's fast-growing wealth management sector came to a head
late last year after one instrument sold through Hua Xia Bank
failed to pay its annualised return, and China's
CITIC Trust announced a payment delay on one of its products.
The CBRC also said it would increase efforts to prevent
credit defaults, to control the sizes of loans to LGFVs and
improve Chinese banks' lending structures, while guaranteeing
sufficient funding for key projects under construction.
Almost 40 percent of loans to LGFVs will come due by 2016
and the outstanding amount of local government debt was
estimated at 10.7 trillion yuan by the end of 2010.
CBRC Chairman Shang Fulin has previously warned that a fresh
spending push this year by local authorities will make it even
harder for banks to limit their new lending to LGFVs.
The Chinese economy grew 7.7 percent in the first quarter
from a year earlier, below expectations and sharply contrasting
with a nearly 60 percent rise in the country's total social
financial, a broad measure of liquidity.
That raised worries that credit is not going into the real
"We will keep a good track of the usage of bank loans to
make sure bank credit is flowing into the real economy," the
CBRC said in the report.
(Reporting by Aileen Wang and Kevin Yao; Writing by Langi
Chiang,; Editing by Jonathan Standing & Kim Coghill)