Finance overseer under study

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China is considering a proposal to create a ministerial-level body to manage its state-owned banks and non-bank financial enterprises, two sources with knowledge of the plan said, a move that would strengthen the country's grip on its lenders.

China's motivations for the move weren't clear, but the step could help the government tighten its control over the financial sector at a time when worries about local debt obligations are intensifying.

The new body would have a say in the management of China's biggest state-controlled financial institutions, including banks, brokerages, insurers, trust firms and funds, said the sources, one of whom has ties to China's top leaders and another who is a senior executive in the Chinese financial industry.

By creating an overseer for banks, China could distribute the burden of managing its numerous and sometimes unruly state-owned firms.

The new financial supervisor would also outrank top bank executives in China's political hierarchy, the sources said, an important consideration in a country where top managers of state-controlled firms are usually high-ranking Party members.

The heads of China's financial regulators, including the China Banking Regulatory Commission and the central bank, have the same or slightly lower Party rank as the heads of the top state-owned firms.

The sources have requested anonymity because they were not authorized to speak to reporters.

The plan, which needs to be approved by the State Council, China's Cabinet, has been intensely debated and has been under consideration for months, the sources said.

The new government entity would be similar to China's powerful State-owned Assets Supervision and Administration Commission, which oversees the country's 121 biggest - and mostly non-financial - state-owned firms.

SASAC acts as something like a board of directors for those companies, sometimes weighing in on strategic moves and deciding how much in dividends the firms should pay to the government.

But Chinese banks do not fall under SASAC's purview, leaving a gap in China's supervision of lenders.