THE securities regulator has surveyed China’s brokerages and fund firms for signs of financing stress, sources said Friday.

The move comes after a state takeover of a troubled bank in May spooked investors and triggered a spike in interbank funding costs.

The China Securities Regulatory Commission (CSRC) has held meetings with non-bank financial institutions recently to learn about the industry’s liquidity and funding conditions, as well as to assess credit default risks, said four sources with knowledge of the situation.

Chinese financial regulators took control of Inner Mongolia-based Baoshang Bank on May 24 due to “serious” credit risks, rattling domestic markets and prompting the People’s Bank of China to inject cash into the banking system.

Financing has become difficult for small banks, as well as brokerages and fund houses, due to demand for higher credit ratings and higher-quality collateral in the interbank lending market.

The CSRC has met some institutions that had been aggressive in issuing structured products, which are facing mounting default risks in the current funding environment, one of the sources said.

Another source said it was unclear whether regulators would roll out fresh supportive measures after their surveys.

To soothe market concerns, regulators have taken a series of measures to ease liquidity stress and repeatedly said risks at small financial institutions are manageable. (SD-Agencies)