China bank regulator inspecting off-balance sheet risks at city banks - sources

SHANGHAI, March 30 (Reuters) - China’s banking regulator is inspecting off-balance sheet risks at city commercial banks, two sources told Reuters on Thursday, as China steps up checks on banks in an effort to control risky lending.

The China Banking Regulatory Commission (CBRC) is checking the size and potential risks from off-balance sheet activities including non-guaranteed wealth management products (WMPs), entrusted loans and entrusted investments, the sources said.

CBRC will take a close look at non-guaranteed WMPs that invest in non-traditional debt investments including those for local government financing vehicles, property, and infrastructure projects, the sources said.

WMPs, often linked to shadow banking, have seen explosive growth in the last few years even as authorities try to contain risks from a rapid build-up in debt.

The CBRC did not immediately comment when contacted by Reuters.

The checks by the banking regulator are separate from the People’s Bank of China’s (PBOC) quarterly Macro Prudential Assessment, or MPA, which assesses risks in banks’ books and encompass off-balance sheet WMPs for the first time in the first quarter. (Reporting by Li Zheng and Elias Glenn; Editing by Richard Borsuk)