Deposit insurance firm to mitigate risks

A deposit insurance fund management company recently established by the central bank will help financial institutions cope with risks and introduce an exit mechanism, experts said.

Public information showed the People's Bank of China set up a deposit insurance fund management company on May 24 with the registration capital coming in at 10 billion yuan ($1.4 billion). The newly founded company, or other institutions entrusted by the company, can acquire, operate, manage and cope with the assets of insurer.

Wang Yifeng, chief analyst of the banking industry at Everbright Securities, said confidence by depositors and financial system stability have been reinforced since the deposit insurance scheme was introduced. About 200 financial institutions participating in the scheme have seen their problems rectified at an early age.