In a closed door meeting, high-level bank executives said the rules would have a major impact and could potentially lead to systematic financial risks, Reuters reported, citing sources that asked not the be named.
There are 12 national joint-stock commercial banks in China with the majority being listed in Shanghai and Hong Kong.
The new rules, which the Reuters report noted had been described as “a critical turning point of financial regulations”, were aimed at closing loopholes that allow regulatory arbitrage, reducing leverage levels and reining in shadow banking activity.
If the current draft of the rules takes effect, banks will be forced to offload assets beforehand, including selling bonds, stocks and other liquid assets at a discount and asking clients to repay loans before time, the sources said.
Multiple concerns
Additionally, the sources said the executives also warned that removing implicit guarantees for wealth management products could trigger redemptions.
This would potentially cause liquidity risks and increase market volatility, the source said to Reuters.
A suggestion was also made by the executives that the rules should be introduced over a three-year transition period.
