SHANGHAI (REUTERS) - China's banking regulator asked joint-stock banks to carry out checks on liquidity risk monitoring and management and the basis of their credit risk, said three people with direct knowledge of the matter.
The move comes after Premier Li Keqiang said China is erecting a "firewall" against financial risks at the annual meeting of parliament on Sunday (March 5), with the economy dogged by concerns over struggling firms' debts.
According to a notice seen by the three people, local branches of the China Banking Regulatory Commission were asked to guide lenders in the use of creditor committee systems to properly deal with large credit risk events and effectively safeguard their claims.
The banks should also improve their non-credit financing risk management, create a unified creditworthiness and risk management system as a real assessment of exposure.
Banks "should use scientific methods to assess the impact that credit, wealth management, lending to financial institutions, investment etc. has on liquidity," the notice said.
Banks should also strictly control risks in financial products, centralise rules governing the same types of business, the notice added.