Asia bank capital series: China’s Basel III regime explained

Author: Ashley Lee | Published: 31 Oct 2013
  • China’s Basel III capital adequacy requirements and the capital conservation buffer were implemented on January 1 of this year;
  • Chinese regulators are contemplating allowing banks to issue preference shares to meet Basel III regulatory capital requirements;
  • Chinese banks are also looking to Additional Tier 1 (AT1) and Tier 2 issuances. AT1 issuances have a statutory write-down point, whereas Tier 2 bonds will be written down at the discretion of the CBRC;
  • However it is unclear whether the CBRC will be the only regulator making a point of non-viability (PONV) determination or if others, such as the state council and the Ministry of Finance, will be involved.

China’s Basel III regime is stricter than that of the Basel Committee on Banking Supervision’s (BCBS) international framework, and involves an...