SHANGHAI (Reuters) -China on Friday tightened rules on companies that conduct debt-to-equity businesses for banks, setting capital adequacy requirements for so-called financial asset investment firms.
Such companies “should have ample capital to deal with group, individual and systemic risks”, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement.
The new rules require a minimum capital adequacy ratio (CAR) of 8%.
The floor of Tier 1 CAR and core Tier 1 CAR are set at 6% and 5%, respectively.
The rules also set requirements on leverage, and urge the companies to set aside counter-cyclical capital during certain circumstances.
Regulators issued the notice of the rules to China’s Big Four banks and financial asset investment firms.
(Reporting by the Beijing Monitoring DeskEditing by Mark Heinrich)
