Reports China To Tightening Banks Capital Requirements

According to reports from Bloomberg, China plans to tighten capital requirements for banks which could curb the record lending which has fueled the massive stock market rally.

The report notes: "The China Banking Regulatory Commission sent draft rule changes to banks on Aug. 19 requiring them to deduct all existing holdings of subordinated and hybrid debt sold by other lenders from supplementary capital, said the people, who have seen the document. Banks have until Aug. 25 to give feedback, said the people, declining to be named as the matter is private."

Chinese banks may need to rein in lending or sell shares to lift capital adequacy ratios to the 12% minimum, as a results.

Link to Report

Related ETFs: iShares FTSE/Xinhua China 25 Index (NYSE: FXI)

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