These credit assets disappeared from the bank's balance sheet. They no longer constituted high-weight risk assets nor impacted the capital adequacy ratio, allowing the bank's loan-to-deposit ratio and other indicators to meet regulatory requirements.
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The fundamental purpose of transferring some high-risk credit assets off the balance sheet is to improve the capital adequacy ratio and reduce on-balance-sheet risks, thereby freeing up more lending space.
As everyone knows, domestic banks live on loans; the more they lend out, the higher their profits.
But lending is not about simply lending as much as you want. To put it simply, it depends on how much deposit your bank holds.
The more you have in deposits, the more you can lend.
For small and medium-sized banks, because their deposits are limited, their lending capacity is also poor.
Everyone knows that the deposit interest rates of city commercial banks are much higher than those of the big four banks, but why?
