Liu Mingkang is a regulator's regulator: stern, patrician and quick to slap down dissent. On Monday, wire services reported that China's Banking Regulatory Commission, where he is chairman, was urging big banks to boost capital ratios to 13 per cent of risk-weighted assets next year, from 10-11 per cent now. Rubbish, retorted Mr Liu. Lenders simply need to formulate “medium- to long-term plans” on replenishing capital; more thinly capitalised banks may face quotas on new lending.

The rebuke is understandable. The global debate on bank capital has been characterised by rumour and misdirection. But swatting the question aside will not suppress the chatter. China's banks enjoy many distinctions, but not capital strength. Of 245 listed banks around the world tracked by Bloomberg, the highest ranked Chinese lender (excluding Hong Kong domiciled banks) is the smallest – $5bn Bank of Nanjing, at 80th place, with 11.6 per cent tier one capital. This year's record loan growth is knocking down capital ratios – especially as the lending mix shifts from short-term bills to longer-term loans with higher risk weightings. At the end of last year, the six largest lenders had average core capital of a little more than 10 per cent. By the third quarter this year, that fell to 8.9 – a record rate of decline, Credit Suisse notes.

Mid-sized lenders are already jockeying for capital. China Minsheng, the ninth-largest listed bank by assets, raised $3.8bn selling shares in Hong Kong last week. Industrial Bank and China Merchants, number eight and five respectively, have announced plans to raise $5.8bn between them. And late yesterday came reports – unconfirmed by the regulator – that ICBC, CCB, Bank of China and Bank of Communications, the top four, had submitted capital plans. By then, CCB and BoC had become the day's biggest fallers on the Hang Seng. Investors are positioning for dilution – whatever Mr Liu says.