Shanghai to introduce stress tests for city's banks

Shanghai's banking regulator is requiring commercial banks in the city to run stress tests related to credit for realty development, including credit for developers and home buyers, in a bid to curb risk exposure, Reuters reported on Tuesday.

The report quoted a circular from the Shanghai Office of the China Banking Regulatory Commission dated Monday, saying that the CBRC will continue monitoring risks that may be brought by realty development and credit to property companies outside the city.

Market insiders said such move are aimed at curbing risk exposure that may come as a result of slowed economic growth and rising bad loan ratio.

Chinese banks' non-performing loan ratio jumped from 1.16 percent by the end of the third quarter of 2014 to 1.29 percent by the end of the fourth quarter, according to CBRC data.

The CBRC's Shanghai Office said in its latest report that it will guide Shanghai's commercial banks to master risk exposure information and handle the risks in a timely manner.

Shenzhen-based developer Kaisa Group Holdings Ltd failed to make an interest payment which expired on Jan 8, and may face a default on its US dollar-denominated debt.