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Published on 2018-07-26 21:29:31 Share it web version
                        The central bank has again resorted to encourage bank credit! MPA assessment part of the key parameters adjusted
Source: Brokerage China Editor: Eastern Fortune Network

In order to promote banks to increase credit, the central bank continued to play a combination boxing.

On July 26, the Chinese reporters of securities companies verified from several sources that some central bank branches have been implementing the requirements for adjusting some MPA parameters to appropriately relax the assessment requirements and promote banks to increase credit supply. The indicator of relaxation is mainly to reduce the partial parameters of the capital adequacy assessment to a certain extent. As of now, it is not known whether the relaxation of the MPA assessment is open to all banking financial institutions.

According to media reports, some banks have received notices to downgrade the structural parameters α to 0.5 in the macro-prudential capital adequacy ratio C* in the MPA assessment (previously the benchmark value was 1). However, the brokerage Chinese reporter learned that the adjustment of the structural parameter α is not uniformly reduced to 0.5, and the standards of different regions and different financial institutions are not the same.

In addition to the structural parameter α adjustment, according to Reuters report, the credit-period contribution parameter β, there will be different degrees of adjustment, this parameter is also for the macro-prudential capital adequacy ratio C* formula.

It can be seen that the parameters of the central bank's adjustment are aimed at appropriately relaxing the assessment of the bank's capital adequacy ratio and the general credit growth rate. These two assessment indicators are also considered by the outside world to be the core of the MPA assessment. The relaxation of these two key indicators It is intended to further encourage banks to increase credit supply.

However, many interviewees believe that the current MPA is not the core factor that constrains the general credit supply of most banks. Therefore, simply lowering the key parameters of MPA has a limited effect on the overall credit expansion of the industry as a whole.

  Reduce bank capital assessment requirements

MPA is a scoring system with seven assessment indicators, including capital and leverage, asset and liability, liquidity, pricing behavior, asset quality, cross-border financing risk, and credit policy implementation. Hit a molecular item. Each indicator has its own score, and finally the total score of the MPA assessment is obtained.

From the perspective of the subdivided assessment indicators, there are two core assessment indicators in MPA: one is the “capital adequacy ratio” under the capital and leverage situation; the other is the “generalized credit” under the balance sheet situation.

At the same time, the above two major indicators are related.

1) The generalized credit growth rate is based on the type of bank, and the growth rate of M2 is checked;

2) The capital adequacy ratio is compared with the macro-prudential capital adequacy ratio. It is worth noting that the macro-prudential capital adequacy ratio created by the central bank is based on the minimum regulatory requirements of the CBRC's capital management measures, plus a certain indicator (assumed as A), which is an assessment standard.

  The specific formula is as follows:

Macro-prudential capital adequacy ratio (Ci*) = αi × (minimum capital adequacy ratio 8% + reserve capital + systemic importance additional capital + counter-cyclical buffer capital) (Structural parameter α mainly refers to the stable operation of financial institutions and credit policy enforcement In the case, the benchmark value is 1.)

Countercyclical capital buffer = max{βi × [institution i generalized credit growth rate - (target GDP growth rate + target CPI)], 0}

As can be seen from the above two formulas, the macro-prudential capital adequacy ratio (Ci*) is related to the organization's general credit growth rate. In short, the higher the general credit growth rate, the higher the standard of macro-prudential capital adequacy required by banks.

Wang Jian, chief banking analyst of Guosen Securities, concluded that if banks want to achieve good results, they must control the growth of general credit. The general credit growth rate is the core indicator that banks can operate in response to MPA assessment. The central bank's approach to controlling broad credit, in addition to limiting the upper limit of growth, is no longer a simple one-size-fits-all approach, but rather linking it to macro-prudential capital adequacy.

"If you want to continue to expand generalized credit, you need capital to keep up. The higher the generalized credit, the higher the evaluation criteria for the macro-prudential capital adequacy ratio. As long as the bank's capital adequacy ratio can be achieved, then you can let go and expand." .

Therefore, the relevant parameters of the macro-prudential capital adequacy ratio are equivalent to loosening the upper limit of the evaluation of the bank's indicator, thereby relaxing the upper limit of the bank's general credit growth rate. I hope to promote the expansion of credit by banks.

  Limited effectiveness in promoting banks to expand credit

However, many interviewees believe that simply relaxing the MPA assessment requirements has a limited effect on promoting banks to expand credit.

Wang Jian said that MPA is not the core factor that restricts the general credit supply of most banks. Therefore, simply lowering the key parameters of MPA has limited effect on the overall credit expansion of the industry. However, some small and medium-sized banks were originally subject to this, and they may accelerate the pace of expansion after relaxation.

Wang Jian explained that under the old parameters, the upper limit of the generalized credit growth rate of listed banks is basically limited to 10-20%. From the performance of the generalized credit growth rate of 25 listed banks at the end of 2017, 21 are lower than the MPA constraint ceiling, and the range is lower than that, indicating that MPA is not the core of restricting banks to put general credit under the old parameters. factor.

"The reasons for restricting bank credit are various. Different banks have different constraints. Some are due to lack of deposits, some are due to insufficient capital adequacy ratio, and some are due to lack of outlets. The assessment of some MPA indicators alone is not enough to promote banks. The industry as a whole increased credit supply." An analyst told the brokerage Chinese reporter.

  The effect of regulatory policy combination boxing remains to be seen

The central bank recently introduced a series of "combination punches" to promote banks to increase credit and bond investment.

First, last week, the 21st Century Economic Report stated that the central bank window will guide banks with first-class dealer qualifications, and will additionally give MLF funds to support loan placement and credit bond investment. For loans, it is required to give MLF funds 1:1 more than the increase in the amount of loans submitted at the beginning of the month. The increase is partly for ordinary loans, and the bills and interbank loans are discouraged. For credit bond investments, AA+ and above are given MLF in a 1:1 ratio, and AA+ ratings are given to MLF funds at 1:2. The requirements must be industrial and financial debts are not met.

2. On July 23, the central bank launched a 50 billion yuan one-year medium-term loan facility (MLF) operation, and the operating rate remained unchanged at 3.3%. There was no MLF expiration on that day, and only 170 billion yuan of 7-day reverse repurchase expired, so the net liquidity of the open market on the same day reached 332 billion yuan.

The “massive” launch of the MLF exceeded market expectations, and its scale of launch was comparable to a one-off RRR. Some analysts believe that this move means that monetary policy will likely shift from the current stable neutrality to easing. This year's follow-up does not rule out the possibility of further targeted RRR cuts.

However, it remains to be seen whether this series of operations will play a role in promoting banks' increased capital supply and improving the current tight financing environment.

“Although since last week, the regulatory authorities have introduced a number of policies to encourage banks to increase credit, but the banks have not acted immediately. At present, the corporate financing environment is still relatively tight, and there will be no significant improvement in the short term.” Beijing’s financial institutions are high. The tube told the brokerage Chinese reporter.

The National Financial and Development Laboratory (NIFD) recently released the China Financial Risk and Stability Report 2018, stating that the credit risk currently facing the market is a structural issue in the process of promoting new regulations. The monetary policy must be fixed, and the “big water flooding” monetary policy is not the key to solving the credit risk problem. The simple adjustment of monetary aggregates can solve the problem of lack of liquidity in financial institutions, but it cannot solve the problem of how liquidity between financial institutions translates into corporate liquidity. Solving and improving credit risk issues should start with related transmission chains and mechanisms.

“The lag in the construction of financial infrastructure is an important reason for the spread of credit risk. At present, China emphasizes the risk prevention of financial institutions; but it is insufficient for the response mechanisms and programs after financial institutions encounter risks. Especially in deleveraging and breaking In the process of the exchange, the financial market lacks mature asset disposal methods and disposal cases, lacks channels and programs to revitalize non-performing assets, and lacks a sufficiently broad derivative market with decentralized credit risks. Therefore, it is necessary to build decentralized market risks as soon as possible. The system of sharing credit losses, clarifying the process and extent of financial institutions' commitment to credit risk," the report said.

  相关报道>>>

  Some financial institutions' MPA structural parameters have been lowered. The general credit growth space has increased.

  监管动向>>>

  Support small and micro enterprises to "hard measures" landing commercial banks to increase credit

  Banking Regulatory Commission: Large and medium-sized banks should increase credit supply, reduce financing costs for small and micro enterprises

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Source: Brokerage China Editor: Eastern Fortune Network

In order to promote banks to increase credit, the central bank continued to play a combination boxing.

On July 26, the Chinese reporters of securities companies verified from several sources that some central bank branches have been implementing the requirements for adjusting some MPA parameters to appropriately relax the assessment requirements and promote banks to increase credit supply. The indicator of relaxation is mainly to reduce the partial parameters of the capital adequacy assessment to a certain extent. As of now, it is not known whether the relaxation of the MPA assessment is open to all banking financial institutions.

According to media reports, some banks have received notices to downgrade the structural parameters α to 0.5 in the macro-prudential capital adequacy ratio C* in the MPA assessment (previously the benchmark value was 1). However, the brokerage Chinese reporter learned that the adjustment of the structural parameter α is not uniformly reduced to 0.5, and the standards of different regions and different financial institutions are not the same.

In addition to the structural parameter α adjustment, according to Reuters report, the credit-period contribution parameter β, there will be different degrees of adjustment, this parameter is also for the macro-prudential capital adequacy ratio C* formula.

It can be seen that the parameters of the central bank's adjustment are aimed at appropriately relaxing the assessment of the bank's capital adequacy ratio and the general credit growth rate. These two assessment indicators are also considered by the outside world to be the core of the MPA assessment. The relaxation of these two key indicators It is intended to further encourage banks to increase credit supply.

However, many interviewees believe that the current MPA is not the core factor that constrains the general credit supply of most banks. Therefore, simply lowering the key parameters of MPA has a limited effect on the overall credit expansion of the industry as a whole.

  Reduce bank capital assessment requirements

MPA is a scoring system with seven assessment indicators, including capital and leverage, asset and liability, liquidity, pricing behavior, asset quality, cross-border financing risk, and credit policy implementation. Hit a molecular item. Each indicator has its own score, and finally the total score of the MPA assessment is obtained.

From the perspective of the subdivided assessment indicators, there are two core assessment indicators in MPA: one is the “capital adequacy ratio” under the capital and leverage situation; the other is the “generalized credit” under the balance sheet situation.

At the same time, the above two major indicators are related.

1) The generalized credit growth rate is based on the type of bank, and the growth rate of M2 is checked;

2) The capital adequacy ratio is compared with the macro-prudential capital adequacy ratio. It is worth noting that the macro-prudential capital adequacy ratio created by the central bank is based on the minimum regulatory requirements of the CBRC's capital management measures, plus a certain indicator (assumed as A), which is an assessment standard.

  The specific formula is as follows:

Macro-prudential capital adequacy ratio (Ci*) = αi × (minimum capital adequacy ratio 8% + reserve capital + systemic importance additional capital + counter-cyclical buffer capital) (Structural parameter α mainly refers to the stable operation of financial institutions and credit policy enforcement In the case, the benchmark value is 1.)

Countercyclical capital buffer = max{βi × [institution i generalized credit growth rate - (target GDP growth rate + target CPI)], 0}

As can be seen from the above two formulas, the macro-prudential capital adequacy ratio (Ci*) is related to the organization's general credit growth rate. In short, the higher the general credit growth rate, the higher the standard of macro-prudential capital adequacy required by banks.

Wang Jian, chief banking analyst of Guosen Securities, concluded that if banks want to achieve good results, they must control the growth of general credit. The general credit growth rate is the core indicator that banks can operate in response to MPA assessment. The central bank's approach to controlling broad credit, in addition to limiting the upper limit of growth, is no longer a simple one-size-fits-all approach, but rather linking it to macro-prudential capital adequacy.

"If you want to continue to expand generalized credit, you need capital to keep up. The higher the generalized credit, the higher the evaluation criteria for the macro-prudential capital adequacy ratio. As long as the bank's capital adequacy ratio can be achieved, then you can let go and expand." .

Therefore, the relevant parameters of the macro-prudential capital adequacy ratio are equivalent to loosening the upper limit of the evaluation of the bank's indicator, thereby relaxing the upper limit of the bank's general credit growth rate. I hope to promote the expansion of credit by banks.

  Limited effectiveness in promoting banks to expand credit

However, many interviewees believe that simply relaxing the MPA assessment requirements has a limited effect on promoting banks to expand credit.

Wang Jian said that MPA is not the core factor that restricts the general credit supply of most banks. Therefore, simply lowering the key parameters of MPA has limited effect on the overall credit expansion of the industry. However, some small and medium-sized banks were originally subject to this, and they may accelerate the pace of expansion after relaxation.

Wang Jian explained that under the old parameters, the upper limit of the generalized credit growth rate of listed banks is basically limited to 10-20%. From the performance of the generalized credit growth rate of 25 listed banks at the end of 2017, 21 are lower than the MPA constraint ceiling, and the range is lower than that, indicating that MPA is not the core of restricting banks to put general credit under the old parameters. factor.

"The reasons for restricting bank credit are various. Different banks have different constraints. Some are due to lack of deposits, some are due to insufficient capital adequacy ratio, and some are due to lack of outlets. The assessment of some MPA indicators alone is not enough to promote banks. The industry as a whole increased credit supply." An analyst told the brokerage Chinese reporter.

  The effect of regulatory policy combination boxing remains to be seen

The central bank recently introduced a series of "combination punches" to promote banks to increase credit and bond investment.

First, last week, the 21st Century Economic Report stated that the central bank window will guide banks with first-class dealer qualifications, and will additionally give MLF funds to support loan placement and credit bond investment. For loans, it is required to give MLF funds 1:1 more than the increase in the amount of loans submitted at the beginning of the month. The increase is partly for ordinary loans, and the bills and interbank loans are discouraged. For credit bond investments, AA+ and above are given MLF in a 1:1 ratio, and AA+ ratings are given to MLF funds at 1:2. The requirements must be industrial and financial debts are not met.

2. On July 23, the central bank launched a 50 billion yuan one-year medium-term loan facility (MLF) operation, and the operating rate remained unchanged at 3.3%. There was no MLF expiration on that day, and only 170 billion yuan of 7-day reverse repurchase expired, so the net liquidity of the open market on the same day reached 332 billion yuan.

The “massive” launch of the MLF exceeded market expectations, and its scale of launch was comparable to a one-off RRR. Some analysts believe that this move means that monetary policy will likely shift from the current stable neutrality to easing. This year's follow-up does not rule out the possibility of further targeted RRR cuts.

However, it remains to be seen whether this series of operations will play a role in promoting banks' increased capital supply and improving the current tight financing environment.

“Although since last week, the regulatory authorities have introduced a number of policies to encourage banks to increase credit, but the banks have not acted immediately. At present, the corporate financing environment is still relatively tight, and there will be no significant improvement in the short term.” Beijing’s financial institutions are high. The tube told the brokerage Chinese reporter.

The National Financial and Development Laboratory (NIFD) recently released the China Financial Risk and Stability Report 2018, stating that the credit risk currently facing the market is a structural issue in the process of promoting new regulations. The monetary policy must be fixed, and the “big water flooding” monetary policy is not the key to solving the credit risk problem. The simple adjustment of monetary aggregates can solve the problem of lack of liquidity in financial institutions, but it cannot solve the problem of how liquidity between financial institutions translates into corporate liquidity. Solving and improving credit risk issues should start with related transmission chains and mechanisms.

“The lag in the construction of financial infrastructure is an important reason for the spread of credit risk. At present, China emphasizes the risk prevention of financial institutions; but it is insufficient for the response mechanisms and programs after financial institutions encounter risks. Especially in deleveraging and breaking In the process of the exchange, the financial market lacks mature asset disposal methods and disposal cases, lacks channels and programs to revitalize non-performing assets, and lacks a sufficiently broad derivative market with decentralized credit risks. Therefore, it is necessary to build decentralized market risks as soon as possible. The system of sharing credit losses, clarifying the process and extent of financial institutions' commitment to credit risk," the report said.

  Related reports>>>

  Some financial institutions' MPA structural parameters have been lowered. The general credit growth space has increased.

  Regulatory trends >>>

  Support small and micro enterprises to "hard measures" landing commercial banks to increase credit

  Banking Regulatory Commission: Large and medium-sized banks should increase credit supply, reduce financing costs for small and micro enterprises