GO
Loading...

Chinese Subprime Risk Limited: People's Bank of China

China has only limited exposure to problems in the U.S. subprime market, and its commercial banks have set aside adequate provisions for dealing with the problems, an assistant central bank governor said on Tuesday.

Yi Gang's comments came after banks such as Bank of China and Construction Bank recently revealed their exposure to the subprime crisis, sending their shares lower.

"Our commercial banks are making very cautious management decisions and have made adequate provisions for any possible risks," Yi said.

Bank of China said it held $8.965 billion in U.S. subprime mortgage-backed loans by the end of June.

Industrial and Commercial Bank of China reported a holding of $1.22 billion and China Construction Bank said it had $1.06 billion.

Bank of Communications, China Merchants Bank and China CITIC Bank reported zero exposure to subprime related products.

Yi said the Chinese central bank believed market confidence was recovering, and the People's Bank of China did not see any immediate signs of the subprime crisis worsening.

He also told a forum that the planned issue of 1.55 trillion yuan in special bonds to fund the country's state investment agency would help the central bank moderately tighten policy, while keeping a basically stable policy stance.

Yi said the Ministry of Finance, the People's Bank of China and other related government institutions were working to ensure market stability amid the massive issuance.

He said China's foreign exchange system was moving towards a market-based one.