China’s bank regulator lets crackdown deadline slip amid concerns it would weaken some lenders, sources say

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Guo Shuqing, chairman of the China Banking Regulatory Commission, attends a press conference at the State Council Information Office on March 2, 2017 in Beijing, China.

China’s banking regulator has extended by two months a June deadline for banks to submit risk assessments over concerns it was putting strain on the lenders, two sources with direct knowledge of the matter said.

Under the leadership of Chairman Guo Shuqing, the China Banking Regulatory Commission (CBRC) started the year promising a “windstorm” to clean up the banking sector, which had been seen as failing to control risks as credit swelled.

The CBRC has launched eight sets of rules in the months since March, and Guo imposed a June 12 deadline for banks to submit written assessments on their lending and other practices, according to an internal notice seen by Reuters.

That deadline has now been extended to mid-August, the sources said. While some lenders made the original deadline, adjusting their operations based on their assessments and feedback from the regulator, others have been unable to comply and have been given the extension.

The decision not to pressure banks who failed to meet the deadline reflects official worries that a tougher stance on banks could weigh on lenders and leave them and the economy weaker, the sources said.

The decision, which has not been officially announced, comes ahead of a party congress in coming months at which economic growth and financial stability are expected to be priorities.