Bank fines surge in China as watchdog battles rising bad loans

Bloomberg

China’s banking regulator is handing out fines at a record pace, as it battles a build-up of financial risk.
The China Banking and Insurance Regulatory Commission, along with its predecessor agency, has issued fines worth about
$585 million since Chairman Guo Shuqing took charge of the watchdog in early 2017, compared with a total of some 1 billion yuan in the previous 14 years of the regulator’s history, according to data compiled by UBS Evidence Lab.
The bank regulator, which merged with the national insurance agency in March compared with 26 a month between 2003 and 2016.
Most of the recent fines were for hiding bad loans, which shows that the CBIRC is increasingly focused on addressing the existing stock of debt held at banks as part of its deleveraging campaign, said Jason Bedford, executive director of Asian financials research at UBS Group AG in Hong Kong.
The agency under Guo has imposed penalties as large as $110 million, fired banks executives, and publicly disclosed the violations.
The enforcement is in line with President Xi Jinping’s campaign to cut risky debt in the economy.
Soured loans in China’s banking sector swelled by an unprecedented 183 billion yuan in the second quarter as stricter rules hit rural banks in particular.