ICBC and Construction Bank test regulator’s tolerance

Pressure on lenders: If the banking regulator pressed ICBC, the most persistent offender, to quickly get its ratio back up to 150, the lender might need to step up disposals of bad debt and could face a big hit to profit. – EPA

SHANGHAI: Two of China’s biggest banks, Industrial & Commercial Bank of China Ltd and China Construction Bank Corp, are testing their regulator’s tolerance by protecting profits at the expense of bad-loan buffers.

ICBC and Construction Bank both reported loan-loss coverage ratios below a regulatory minimum of 150% of existing non-performing loans when they disclosed third-quarter earnings.