(Reuters) - China's financial regulator has asked banks to respond to a Goldman Sachs (NYSE:GS) report published last week that downgraded ratings on some Chinese banks and raised questions over the whole sector, Bloomberg News reported on Wednesday.
Goldman said in a report last week it had downgraded Agricultural Bank of China, Industrial and Commercial Bank of China and Industrial Bank, sending Chinese banking stocks tumbling.
The Wall Street bank said Chinese banks could not maintain a good balance of provisions, capital and dividends at the same time as their earnings have been squeezed.
China's largest banks have been hit by prolonged downturn in the property sector and now face near-term revenue and margin pressures due to rising costs and a deteriorating global economic outlook.
The National Administration of Financial Regulation communicated with several of the largest Chinese banks and told them to respond appropriately without giving specific guidance, Bloomberg News reported citing sources.
Last Friday, China's state-backed Securities Times said in an editorial the Goldman Sachs downgrade of lenders to "Sell" ratings was based on "pessimistic assumptions".