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China's banking regulator helps companies ride out economic challenges

Updated: Jan 15,2020 09:17 AM    CGTN

China's banking regulator on Jan 13 introduced measures, such as setting up debtor committees and carrying out debt-to-equity swaps, to help companies ride out economic challenges, especially financial risks.

"For some private enterprises that have temporarily encountered difficulties, we use various methods, such as setting up debtor committees and carrying out debt-to-equity swaps, to help them," said Zhu Shuming, vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC).

At present, there are about 19,000 debt commissions nationwide and about 14,000 privately-owned enterprises, said Zhu.

In order to keep the economy afloat, Chinese banks issued 17 trillion yuan (about $2.45 trillion) in new loans in 2019, posting a year-on-year increase of 1.1 trillion yuan.

Banking loans to the manufacturing and infrastructure industry increased by 780 billion yuan and 2.8 trillion yuan, respectively, by the end of 2019, compared with the beginning of last year.

Meanwhile, outstanding loans to small and micro firms reached 11.6 trillion yuan, a year-on-year increase of 25 percent at the end of 2019.

The banking regulator said key progress is being made in financial risk prevention and control.

"We will intensify the exposure and disposal of non-performing loans. The annual disposal of non-performing loans is about 2 trillion yuan. All loans that are overdue for more than 90 days by commercial banks are included in the management of non-performing assets. A total of 19,200 creditor committees have been established nationwide, and 1.4 trillion yuan of market-oriented debt-to-equity swaps have been implemented to help enterprises reduce and leverage debt," said Huang Hong, vice-chairman of the CBIRC.

In 2020, methods for financial supervision and evaluation will be introduced for small and micro enterprises in commercial banks. A regulatory evaluation method that mainly covers credit services will be released shortly after, according to the conference.