China asks big banks to increase provisions -paper

BEIJING, March 12 (Reuters) - China's banking regulator has ordered the country's biggest banks to raise provisions to 150 percent of bad loans currently on their books because of worries that asset quality may deteriorate amid the slowing economy, a Chinese newspaper reported on Thursday.

The five lenders affected by the order are Agricultural Bank of China [ABC.UL], Industrial and Commercial Bank of China (601398.SS), China Construction Bank (601939.SS), Bank of China (601988.SS), and Bank of Communications (601328.SS).

This is the second time the China Banking Regulatory Commission has required banks to put aside more provisions in about three months. In December, it raised the ratio to 130 percent for the top five banks, up from 100 percent. The 21st Century Business Herald also reported, citing unidentified sources, that the ratio for joint stock banks stayed unchanged at 150 percent. It had been raised to that level in December from 100 percent.

Chinese officials have repeatedly said that the country's banks are in good shape despite the global financial crisis, but the regulator has also tightened rules on risk management and ordered banks to increase their capital cushions and provisions.

New loans soared in recent months after the government called on banks to ramp up credit to help finance the stimulus package and boost economic growth. Some analysts have said that, over the medium term, this could lead to a rebound in the non-performing loans that the government cleaned off banks' books earlier this decade through massive capital infusions.

Banks extended 1.6 trillion yuan ($234 billion) in new loans in January. The central bank is expected to announce February figures as early as Thursday, and officials have said that the number would top 1 trillion yuan, still very high by historical standards. ($1=6.839 Yuan) (Reporting by Langi Chiang; editing by Ken Wills)