Fitch is monitoring bank governance risks in China, according to reports published by the rating agency over the past month across a number of issues.
Fitch announced that so-called margin finance curbs which are designed to better regulate lending, may not be adhered to by all market participants, including market leaders, notwithstanding the presence of regulatory oversight. It said on January 20th, 2015, that recent fines for violations "highlight some of the risks related to corporate governance in the country's financial sector".
Fitch announced that so-called margin finance curbs which are designed to better regulate lending, may not be adhered to by all market participants, including market leaders, notwithstanding the presence of regulatory oversight. It said on January 20th, 2015, that recent fines for violations "highlight some of the risks related to corporate governance in the country's financial sector".
Today, Fitch announced that recent corruption probes in the country also highlights bank risk governance risks in China. Recent events being followed by the agency include the departure of Mao Xiaofeng, President of China MinSheng Bank and Lu Hai Jun, Bank of Bejing's Board Member. The agency noted that while such events where not likely impact its Support or Viability Ratings in the short term, such developments may be a "precursor to a wider investigation into corporate management". In the long term, there exists the potential to enhance transparency and governance standards which could become positive for the sector. Thus far, Fitch says "A lack of transparency combined with nascent regulatory and legal systems act as a sector wide constraint on VRs [sic ratings]".
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