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China’s securities regulator Shang Fulin has been appointed as chairman of the China Banking Regulatory Commission, where he will oversee the nation’s banking watchdog. He will replace Liu Mingkang in part of the biggest reshuffle of financial officials in a decade, reports Bloomberg.

Guo Shuqing, 55, resigned from Construction Bank on October 28. He will take over Shang’s role at the China Securities Regulatory Commission. Xiang Junbo, 54, stepped down from Agricultural Bank of China to replace Wu Dingfu at the China Insurance Regulatory Commission. Wu and Liu have reached retirement age.
 

“Guo’s appointment will be good for China’s capital markets as he respects rules and the rights of other people,” Chen Zhiwu, a finance professor at the New Haven, Connecticut- based Yale School of Management, told Bloomberg. Shang is unlikely to make big changes overnight, added Chen. “He’s cautious in making decisions and takes different opinions into consideration.”

Shang will head a 106 trillion-yuan ($17 trillion) industry that includes four of the world’s 10 largest lenders by market value, including Construction Bank and  Industrial & Commercial Bank of China. He spent the past nine years as the securities regulator, and will now be tasked with curbing a potential surge in future bad loans. This will be on the tail of a record $2.7 trillion two-year credit boom that fueled China’s post-financial crisis expansion.

“The biggest challenge facing Liu’s successor is the ability to prudently regulate the banks in light of the development of China’s capital markets,” Mike Werner, a senior analyst at Sanford C. Bernstein & Co. in Hong Kong, told Bloomberg.“With a growing number of products, such as wealth management products, and number of financial entities, such as trust firms, balancing the profitable development of the banking sector with the regulation will be difficult.”
 

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