China’s banking regulator is letting six big banks use their own models for calculating their capital ratios, giving them greater flexibility in risk evaluation and the use of their assets.
The China Banking Regulatory Commission said Thursday that the change, which is already in effect, is in line with global standards known as Basel III, and exempts the six institutions from a uniform formula used by the rest of the banking sector.
Analysts said this move will make it easier for the bigger and better-managed banks to meet capital requirements and will allow them to make more efficient use of their existing assets by reducing the risk-weighting of some assets.
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