On 1 June, the China Banking Regulatory Commission (CBRC) promulgated the Leverage Ratios in Commercial Banks Administrative Measures which will take effect on 1 January 2012.
Definition and calculation
According to the Measures, leverage ratio means the ratio of the total of adjusted on-balance sheet assets to the adjusted total of off-balance sheet assets of banks with tier 1 capital and of commercial banks in accordance with relevant regulations.
The leverage ratio of the consolidated statements and unconsolidated statements of a commercial bank must not be less than 4%.
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Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.