China's central bank is adjusting the way it measures bank deposits and loans, in a bid to increase supervision of cash in the banking system at a time shadow bank activity has seen a resurgence.
The move comes as freshly-released December loan data shows that the shadow banking portion of what China calls "total social financing" was the highest since January 2014, reversing the trend of shrinking off-balance sheet credit seen in most of last year's second half.
The steps the People's Bank of China (PBOC) are taking also show that its recent tweak to how loan-to-deposit ratios banks are calculated was not a form of monetary easing, but instead a preliminary step to applying further pressure on shadow banking.
According to a transcript of an official briefing to domestic media seen by Reuters on Thursday, the PBOC will include deposits by non-deposit-taking institutions made in accounts at banks deposit-taking institutions in calculations of deposits, and will include lending by deposit-taking institutions to non-deposit-taking institutions in loan calculations.
BROKERAGE MARGIN DEPOSITS
The transcript made particular mention of margin deposits from brokerages at banks. Regulators have signalled concern that a massive stock market rally set off in November is at risk of over-heating, given large quantities of cheap leverage provided through brokerage margin accounts.
The transcript quoted comments by Sheng Songcheng, the head of the PBOC's statistics department, during a question-and-answer session to which foreign media were not invited.
"The changes in calculating deposit and loan items are aimed at making (Chinese standards) gradually be in line with usual international practices," Sheng was quoted as saying.
"As these changes are aimed at more accurately reflecting the reality of social deposits loans, as well as liquidity conditions, people should not read too much into them on the policy front."
Despite the crackdown, off-balance sheet lending led by entrusted loans and trust loans shot up in December, official data showed on Thursday, even as traditional yuan loans fell far short of expectations.
"Shadow banking is back with a vengeance, and I'm not sure why the year ended this way but it's clear that there is a lot of money creation outside of the banking system," Dariusz Kowalczyk, an economist at Credit Agricole CIB.
In December, Chinese banks extended far less credit than expected in December, despite instructions by the PBOC to lend more in the last months of 2014 to support the slowing economy.