The China Banking and Insurance Regulatory Commission deployed a pilot program for the transfer of single-account-to-business and batch-of-person NPLs——
Broaden disposal channels to resolve existing risks
Our reporter Guo Ziyuan
The Economic Daily reporter recently learned that the China Banking and Insurance Regulatory Commission has issued a document to formally launch a pilot project for the transfer of single-family-to-business and batch personal non-performing loans, and to explore the establishment of a unified non-performing asset trading platform.
The first batch of banks to participate in the pilot program are 6 large state-owned commercial banks and 12 national joint-stock commercial banks. The institutions involved in the acquisition of non-performing loans include 5 financial asset management companies and qualified local asset management companies and financial asset investment companies.
Channels for disposing of non-performing loans have once again expanded.
"Broadening the channels for disposing of non-performing loans will help alleviate the pressure on commercial banks to dispose of non-performing loans." said Bu Xiangrui, the legal counsel of the China Banking Association. Previously, banks had a single channel for disposing of non-performing loans, including loan extension, loan collection, asset transfer, and The effects of disposal methods such as write-off of non-performing assets are also relatively limited.
Rising pressure on non-performing loans still exists
The latest regulatory data show that as of the end of December 2020, the balance of non-performing loans of my country's commercial banks was 3.5 trillion yuan, an increase of 281.6 billion yuan from the beginning of the year; the non-performing loan ratio was 1.92%, a decrease of 0.06 percentage points from the beginning of the year.
Judging from the disclosed three quarterly reports of listed banks, the balance of non-performing loans and non-performing loan ratios of the five major state-owned banks have all seen "double increases."
Take the non-performing loan rate as an example. As of the end of the third quarter of 2020, the non-performing loan rates of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications increased by 0.12 percentage points, 0.12 percentage points, and 0.11 percentage points respectively from the end of the previous year. Percentage points, 0.11 percentage points, 0.20 percentage points.
In terms of the regional distribution of non-performing loans, they are mainly concentrated in the central, western and Bohai Rim; in terms of industry distribution, manufacturing, wholesale and retail, leasing and business services are more prominent.
Many people in the industry said that there are two main reasons for the above phenomenon.
First, under the impetus of strong supervision, the identification of non-performing loans has become more stringent, and some of the previously covered non-performing loans have been fully exposed.
"Some banks' loans overdue for more than 60 days are all included in non-performing loans," said Liu Fushou, chief lawyer of the China Banking and Insurance Regulatory Commission.
Second, due to multiple factors such as the epidemic, the operating conditions of some companies have declined and loan repayment capabilities have declined.
"Under the influence of the sudden epidemic, the sales of well-run companies have been interrupted, orders have been compressed, and the rebound of non-performing loans is inevitable." said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission.
It is worth noting that the economic downturn has a time lag in the financial sector.
From a macro perspective, the short-term hedging effect of the policy still exists; from a micro perspective, in order to help companies resume work and production, the supervisory authorities have adopted methods such as extension, loan renewal, and deferred repayment of principal and interest, which to a certain extent caused partial defaults The risk temporarily delays exposure.
"It is expected that in the next period of time, non-performing loans will gradually appear and rise." Guo Shuqing said.
Prepare enough "ammunition" in advance
Although the upward pressure on non-performing loans still exists, my country's commercial banks still have adequate risk offset capabilities.
As of the end of December 2020, the provision coverage ratio of my country's commercial banks was 182.3%. That is to say, the bank has withdrawn 1.823 yuan from the profit for the possible loan loss of 1 yuan.
"In the next step, the China Banking and Insurance Regulatory Commission will increase risk awareness, adhere to the risk-based supervision principle, estimate risks more comprehensively, prepare more adequate response measures, and resolutely maintain the bottom line of avoiding systemic financial risks." Liu Fushou said. It is necessary to prepare enough "ammunition" to withstand risks, to pay close attention, early planning, active response, early detection, early disposal, and early prevention.
Two things are crucial, one is to replenish capital, and the other is to raise adequate provisions.
"Doing business requires capital, and maintaining sufficient capital is very important." Liu Guoqiang, deputy governor of the central bank, said that the central bank will work with relevant departments to promote and improve the system and mechanism of bank capital replenishment, and support banks to use perpetual bonds, secondary capital bonds, etc. Innovative capital tools, replenishing capital through multiple channels.
At the same time, many commercial banks have increased their provision for provision, aiming to "prevent a rainy day."
Regulatory data shows that in the first three quarters of 2020, the banking industry has already withdrawn 1.5 trillion yuan in new provisions, an increase of 206.8 billion yuan year-on-year.
It should be noted that although the banking industry’s overall provisioning is relatively adequate, there are problems of uneven distribution, especially some small and medium-sized institutions have low provisioning levels, unsubstantiated funds, and limited replenishment capabilities and limited channels.
For this reason, in 2020, the industry has tried to supplement the capital of small and medium-sized banks by issuing local government special bonds, but the relevant standards of this innovative method still need to be refined and the exit mechanism needs to be improved.
The reporter was informed that in the future, the supervisory authority will focus on cooperating with the provincial government to formulate the "Implementation Plan for Issuing Special Bonds to Replenish Bank Capital" in order to better consolidate capital and improve the risk resistance and credit allocation capabilities of small and medium banks.
Broaden disposal channels in a timely manner
In addition to preparing enough "ammunition" to withstand risks, how to effectively deal with the non-performing loans that have emerged and may appear?
"On the one hand, it is necessary to resolve existing risks, continue to increase the disposition of non-performing loans, and broaden the disposal channels for non-performing loans; on the other hand, it is necessary to strictly control incremental risks and urge banks to strengthen internal control and risk management to prevent new non-performing loans. Rise too fast.” said Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission.
Specifically, the first is to further classify real assets.
Strictly distinguish between companies that are experiencing difficulties affected by the epidemic and those with higher operating risks.
For the latter, the asset classification must be determined in strict accordance with the regulations, and those that meet the bad standards must be classified as bad, and other on-balance-sheet and off-balance sheet assets that actually bear credit risk should also follow the classification standards.
"The Agricultural Bank of China will grasp the scope of application of the relief policy, and resolutely support those who should be supported, and those who should be retired." said Zhang Qingsong, President of the Agricultural Bank of China. Develop docking measures for policy withdrawal.
The second is to continue to increase disposal efforts.
According to statistics, my country’s banking industry will dispose of non-performing assets of 3.02 trillion yuan in 2020, higher than the 2.3 trillion yuan in 2019.
"In 2021, the resolution will be greater, because many loans have been postponed, and some problems will only be exposed this year." Guo Shuqing said that the resources released by reducing the provision coverage rate must all be used to deal with non-performing loans.
The third is to broaden the channels for the disposal of non-performing assets, and comprehensively use such means as write-off, clearing, batch transfer, debt-to-equity swaps, etc., to ensure that all verifications should be done and everything should be done.
At the same time, insurance asset management companies, financial asset investment companies, etc. are allowed as new entities to cooperate with banks to explore new ways to dispose of non-performing assets.