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At the RiskMinds Asia conference in Singapore today, Andrew Sheng, Chief Adviser to the China Banking Regulatory Commission (CBRC) committed to the continued emphasis on risk management as one of the Chinese regulator’s three key objectives.
The Chinese banking sector had grown in strength over the past 10 years and, so far, the story was a successful one. However there was still a lot to do in and the concentration was on infrastructure, human resources, processes and structures, regulations and standards. There had been great advances in the top end of the banking sector but there was still much to do at the middle and bottom ends. Reform was necessary and, at the bottom end, the rural banks and cooperatives of which there are over 19,000 comprising 1.06% of the total banking asset value, needed both reform and consolidation. The policy was vividly illustrated as “grab both ends and push the middle”.
In support of these policies, the CBRC would be concentrating on improving asset value within the banks, imposing capital requirements, and strengthening corporate governance and risk management – and Sheng saw these last two as being inseparably intertwined. China would continue with its emphasis on policy-based regulation but a key requirement was the development of skills. China had the brains but not the experience and this is contributing to current issues.
Although credit risk was still the largest risk in China, operational risk was now getting full attention. “Risk is not just about products, it is about people” said Sheng. “Bank staff must be trained to be risk conscious.” Sheng also added that they would be concentrating on operational risk management, and see IT risk as inseparable from this. Onsite inspections of IT risk will start during 2008.
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