Announcement on Seeking Public Comments on the Administrative Measures for the Leverage Ratio of Commercial Banks (Revised Draft for Comment)
Announcement on Seeking Public Comments on the Administrative Measures for the Leverage Ratio of Commercial Banks (Revised Draft for Comment)
Announcement on Seeking Public Comments on the Administrative Measures for the Leverage Ratio of Commercial Banks (Revised Draft for Comment)
November 20, 2014
With a view to further improving China's regulatory policy framework for leverage ratios of the banking industry, the China Banking Regulatory Commission (hereinafter referred to as the "CBRC") has recently revised the Administrative Measures for the Leverage Ratio of Commercial Banks, which are hereby promulgated for public comments. Please provide the Policy Research Bureau of the CBRC with comments and suggestions by letter, email or fax prior to December 20.
Fax number: 010-66299116
E-mail address: zhuyuanqian@cbrc.gov.cn
Correspondence address: Policy Research Bureau of the CBRC at Jia No.15 Financial Street, Xicheng District, Beijing Municipality
Zip code: 100140
Administrative Measures for the Leverage Ratio of Commercial Banks (Draft for Comment)
Chapter I General Provisions
Article 1 In order to effectively control the leverage level of commercial banks and maintain their safe and stable operation, the Administrative Measures for the Leverage Ratio of Commercial Banks (Draft for Comment) (hereinafter referred to as the "Measures") are formulated in accordance with the Banking Regulation Law of the People's Republic of China and the Law of the People's Republic of China on Commercial Banks.
Article 2 The Measures shall apply to the commercial banks established within the territory of the People's Republic of China, including Chinese-funded banks, wholly foreign-funded banks and Sino-foreign joint venture banks.
Article 3 For the purpose of the Measures, the leverage ratio refers to the ratio between a commercial bank's net Tier-1 capital that complies with the relevant provisions and the balance of its assets on and off the adjusted balance sheet.
Article 4 The leverage ratio of both the consolidated balance sheet and the unconsolidated balance sheet of a commercial bank shall not be lower than 4%.
Article 5 The China Banking Regulatory Commission (hereinafter referred to as the "CBRC") shall carry out supervision and inspection of commercial banks' leverage ratio and management thereof in accordance with the provisions of the Measures.
Article 6 The CBRC shall conduct constant monitoring on the overall leverage ratio of the banking industry, and strengthen analysis and prevention of the systemic risks of the banking industry.
Chapter II Calculation of Leverage Ratio
Article 7 The calculation formula for the leverage ratio of commercial banks shall be:
Leverage ratio = (Tier-1 capital – Tier-1 capital deductions) / balance of assets on and off the adjusted balance sheet * 100%
Article 8 The Tier-1 capital and Tier-1 capital deductions shall be the Tier-1 capital and Tier-1 capital deductions defined under the Administrative Measures for the Capital of Commercial Banks (for Trial Implementation).
Article 9 The calculation formula for the balance of assets on and off the adjusted balance sheet shall be as follows:
Balance of assets on and off the adjusted balance sheet = balance of assets on the adjusted balance sheet (excluding the derivatives and the securities financing transactions on the balance sheet) + balance of assets that are derivatives + balance of assets under securities financing transactions + balance of items off the adjusted balance sheet – Tier-1 capital deductions
Tier-1 capital deductions deducted from the balance of assets on and off the adjusted balance sheet of a commercial bank shall not include the unrealized gains and losses of a commercial bank due to changes in the fair value of its liabilities as a result of changes in its own credit risks.
Article 10 Unless otherwise prescribed herein, when calculating the balance of assets on and off the adjusted balance sheet, a commercial bank shall not take into consideration collaterals, guarantees, credit derivatives and other credit risk mitigation factors.
Article 11 The balance of assets on the adjusted balance sheet shall be the balance of assets on the balance sheet after deduction of the provisions or accounting valuation adjustments accrued for the relevant assets.
Article 12 The balance of assets that are derivatives shall be calculated according to the method exhibited in Appendix I hereto.
Article 13 The balance of assets under securities financing transactions shall be calculated according to the method exhibited in Appendix II hereto.
Article 14 The balance of items off the adjusted balance sheet shall be calculated according to the following methods:
1.
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