Given that we are proposing to increase minimum requirements for the highest quality Tier 1 capital from 8.5% to 16% or 15%, our most recent consultation paper asks the question of whether this lower quality Tier 2 capital is needed as part of the capital framework at all.
As many have observed, in the government orchestrated reform process of the large commercial banks and the RCCs, the large banks and some medium-sized banks tend to emphasize on their services to the large corporate clients, emphasize on restructuring the used-to-be loose credit management system, and emphasize on strengthening internal control and consolidated management.