China's ICBC says happy to help, hopes for clearer policy signals

Wed Jun 26, 2013 2:42am EDT
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By Jason Subler and Xiaowen Bi

BEIJING (Reuters) - China's biggest bank was uncertain of how to respond to turmoil in money markets last week because there was no clear direction from policymakers on what they wanted to achieve, according to its top executive.

Jiang Jianqing, Chairman of Industrial and Commercial Bank of China Ltd (ICBC) (601398.SS: Quote) 1398.HK, stopped short of directly criticizing regulators for their handling of the stand-off over money market liquidity, which saw overnight borrowing rates soar and caused panic at some smaller banks.

But Jiang's comments are the clearest indication yet of frustration among senior bankers over how the central bank handled the situation, with markets only calming down after the People's Bank of China (PBOC) made public comments this week.

"We hope that in future, policy expectations can be clearer. That would be help us understand the overall market situation better and more deeply. Those few days, even for us, we were genuinely a bit tense," Jiang told Reuters in his wood-paneled office in downtown Beijing on Tuesday.

Jiang said ICBC's own liquidity situation was sound and that it was prepared to heed the call by the PBOC for big banks to lend to their smaller counterparts should they face short-term cash crunches to help stabilize the market.

But in order to play that role, he said, ICBC -- the world's biggest commercial bank by market value -- and other big banks needed a clearer sign of where things were headed.

He described a harried few days in the past week, when ICBC and other banks tried to assess what was happening in money markets as the central bank apparently decided to use the opportunity of a cash crunch to try to choke off funds flowing to speculative activities and the informal lending sector, sending rates to levels normally only seen during crises.

"We too needed a few days to finally become clear on the risks, and to understand the underlying reasons for the market movements," he said   Continued...

Industrial & Commercial Bank of China (ICBC) Chairman Jiang Jianqing attends a news conference announcing the bank's annual results in Hong Kong March 30, 2011. REUTERS/Tyrone Siu