Fully understand the current significance of strengthening the capital adequacy control of commercial banks. China's banking industry generally has insufficient self-discipline capabilities, a high proportion of non-performing assets, high operating risks, and low capital adequacy ratios of all types of commercial banks.

According to data released by the China Banking Regulatory Commission, as of the end of 2003, the average capital adequacy ratio of China's 11 joint-stock commercial banks was 7.35%, and the average capital adequacy ratio of 112 city commercial banks was 6.13%.

The capital adequacy ratio of the five listed banks is relatively high, but due to the expansion of scale, the capital adequacy ratio has also been declining: Shenzhen Development Bank's capital adequacy ratio at the end of 2002 was 9.49%, which dropped to 8.89% in the first quarter of 2003.

Hua Xia Bank's capital adequacy ratio reached 8.01% just before listing; Shanghai Pudong Development Bank's capital adequacy ratio from 2000 to 2002 was 13.5%, 11.27% and 8.54% respectively, and only improved after the additional issuance in January 2003; Minsheng Bank

In June 2000 before the listing, the capital adequacy ratio was 10.48%. After the listing, the capital adequacy ratio soared to 21.45% at the end of 2000. However, a year later, at the end of 2001, the capital adequacy ratio plummeted to 10.1%, and then fell again at the end of 2002.

to 8.22%. Although all the convertible bonds issued by the bank in March 2003 were used to supplement capital, as of June 30, the capital adequacy ratio still dropped to 7.11%.

In order to speed up the pace of joint-stock reform and achieve the "hard target" of reducing the ratio of non-performing assets, the four state-owned commercial banks have very obvious short-term behavior.

In this environment, strengthening bank capital adequacy control has important practical significance.

First, strengthening capital adequacy controls is conducive to fair competition among banks.

At present, the Chinese commercial banking system consists of three parts: state-owned commercial banks, joint-stock commercial banks and city commercial banks.

State-owned commercial banks have absolute advantages in various aspects such as institutional outlets, customer resources, and market share. At the same time, they are also guaranteed by national reputation and have strong competitiveness in peer competition.

If regulatory agencies cannot achieve "equality before the law," and state-owned banks still have privileges in some aspects, fair competition will not be possible.

Although there are large differences in the capital adequacy ratios of various types of commercial banks, commercial banks that meet the standards and those that do not meet the standards are indistinguishable in terms of business scope, asset scale, expenses, and salaries, thus forming an unfair competitive environment.

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Secondly, it is helpful to control the scale of credit and improve asset quality.

As a "rigid" indicator, capital adequacy ratio will prompt banks to actively digest non-performing assets, change their asset structure, and reduce risk-weighted assets when they are insufficient in capital, in order to meet the legal standard of 8%.

Even if capital is sufficient, commercial banks must determine their business scale based on this indicator when capital is certain.

Therefore, capital adequacy control is conducive to preventing commercial banks from blindly expanding regardless of their own strength.

It is precisely because this "rigid" indicator has been "softened" in China that commercial banks have a serious shortage of capital on the one hand, and on the other hand they have significantly increased credit assets in order to achieve short-term goals (such as diluting the non-performing loan ratio).

Third, it can protect the interests of depositors.

As a credit intermediary, commercial banks' main sources of funds are deposit liabilities, of which savings deposits account for about 60% of all liabilities; on the other hand, as an asset business for the use of funds, they invest funds in various profitable assets, and inevitably there are various

Once the risk is converted into actual losses, it will face the obligation to make up for the losses and meet the liquidity requirements of depositors.

Strengthening capital adequacy control can improve the ability of commercial banks to resist risks and protect the interests of depositors, especially resident depositors.

Fourth, it is helpful to promote internal reforms of banks and improve their profitability.

The capital of state-owned commercial banks comes from two aspects: state fiscal appropriation and self-accumulation. Self-accumulation is endogenous capital, which is the part that commercial banks can change through their own efforts. Under the current fiscal balance and expenditure situation, the realistic operating method is commercial

Banks accelerated the pace of internal reforms to improve profitability.

Fifth, it is conducive to promoting business innovation of state-owned commercial banks.

Strengthen capital adequacy control so that the asset business scale of commercial banks is subject to the capital scale. In order to increase profits, commercial banks must find another way to develop intermediary business, which will help promote the development of state-owned commercial banks in financial products, service methods, service means, etc.

innovation and improve its competitiveness.

Recommendations for strengthening capital adequacy control of state-owned commercial banks. First, we should draw on international experience, fully consider the self-discipline capabilities of my country's commercial banks and the regulatory capabilities of regulatory agencies, and formulate highly operable capital control measures.

The United States passed the Federal Deposit Insurance Corporation Improvement Act (FDICIA) in November 1991. Section 131 of FDICIA - Immediate Improvement Measures (PAC) evaluates banks based on three indicators: total capital ratio, core capital ratio and leverage ratio.

Capital adequacy status, and based on this, commercial banks are divided into five levels: good capital, moderate capital, insufficient capital, obvious insufficient capital and serious insufficient capital, so that immediate improvement measures can be taken for those banks with insufficient capital.