PBOC Says Number of High-Risk Banks to Fall as It Cracks Down

The People’s Bank of China (PBOC) said Thursday (March 3) that it expects to see a continuing drop in the number of high-risk banks across the country as it continues its crackdown on financial risks across all sectors of the Chinese economy, according to a Bloomberg report.

PBOC expects to see the number of lenders in the “high-risk” category of its quarterly reviews to drop below 200 by 2025 from 316 in the fourth quarter of 2021, according to a central bank statement Thursday. That’s down from a high of 649 banks in the high-risk category in the third quarter of 2019.

High-risk banks accounted for 1.04% of overall assets in the Chinese banking industry last year, an indication of the sector’s stability, according to the PBOC statement. China had 4,398 banking institutions in the last quarterly review, the group said.

The PBOC renewed its vow to prevent any systemic financial risks from happening and “defuse bombs with precision,” according to the statement. The central bank scaled back speculation in cryptocurrency trading across China and the share of onshore Bitcoin global trading volume dropped to 10% from more than 90% in the past, the report says.

Several high-profile bankruptcies across China have taught companies to follow market principles, and the PBOC sees an increase in compliance with laws and regulations across the region, according to the report.

Related: China to Renew Money Laundering Crackdown

In January, China launched a nationwide crackdown on money laundering, with PBOC announcing that 11 government agencies will implement the campaign through 2024, with a goal to “stop the spreading trend of money laundering and other related crimes.”

Last summer, the Chinese police arrested 1,100 suspects on money laundering charges, saying they were allegedly using cryptocurrencies to evade the law.

China has also been undergoing a national crackdown on money laundering related to telecommunications fraud, dubbed “Operation Card Breaking.” The Chinese police have shut down 170 criminal organizations on top of the myriad arrests.