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Chinese regulator requires banks to disclose liquidity standard every 6 months

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Chinese regulator requires banks to disclose liquidity standard every 6 months

China's banking regulator issued rules relating to banks' disclosure of their net stable funding ratio, requiring them to disclose the ratio every six months.

The net stable funding ratio, or NSFR, measures banks' available stable funding divided by required stable funding, and was introduced under Basel III guidelines to help support financial stability by ensuring that funding shocks do not significantly raise the probability of distress at banks. The ratio should be at least 100%.

The China Banking and Insurance Regulatory Commission in May 2018 introduced three quantitative indicators, including the NSFR, to help banks in the country better guard against liquidity risks.

In rules published March 19, the CBIRC said Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd., Bank of China Ltd., Bank of Communications Co. Ltd. and China Merchants Bank Co. Ltd. should disclose the NSFR for the last four quarters on their websites, while other banks should do so for the last two quarters.

Further, the rules require Chinese commercial banks to disclose the NSFR for the last three quarters in their initial disclosures.