China's banking regulator yesterday announced it would set up a risk warning system for the nation's banks, in a fresh move to fight banking irregularities and reduce risks posed to the sector.

The launch of the new system, which follows a series of risk-control measures taken by the China Banking Regulatory Commission (CBRC), confirmed the regulator's resolve to strengthen the supervision and management of the banking industry - widely considered as one of the weak links in China's booming economy.

According to a statement released yesterday on the regulator's website, the CBRC has established risk-warning operation guidelines for commercial banks and installed computer systems to automatically detect wrongdoing and risks.

The new system is expected to help the regulator better monitor the performance of banks and spot banking loopholes so that necessary measures can be taken to avoid future problems.

A series of criminal cases tarnishing the image of the sector have emerged in recent months, pushing the industry into formulating such a mechanism.

The risk-warning system, according to the CBRC, collects important data about banks' capital adequacy ratios, credit risk, market risk, operational risk and liquidity risk.

It is also capable of qualitative analysis on banks' corporate governance, operational environment and their risk-managing and reduction capability.

The CBRC will launch the pilot operation of the scheme in all banks operating in China, which include State-owned commercial banks, shareholding banks, city commercial banks, as well as joint venture and foreign banks.

(China Daily April 22, 2005)