BEIJING - China's banking regulator said on Friday it had made remarkable progress in improving corporate governance and risk management in the banking sector, at a time when a banking crisis in the U.S. and Europe is stirring contagion fears.

The China Banking and Insurance Regulatory Commission (CBIRC) said that from 2020 to 2022 it had enhanced the Communist party's leadership in small and midsized banks and "achieved significant results" in defusing risks in financial institutions.

The remarks came as the collapse of Silicon Valley Bank (SVB) and Credit Suisse roiled global markets and forced policymakers to rush to calm investor nerves. Shares of China's smaller lenders have far underperformed big banks amid concerns over their ability to manage risks.

Communist Party leadership has been further integrated with corporate governance and took a lead when dealing with cases involving some risky institutions, the regulator said.

It said "chaos" in the operation of some small and medium-sized banks in recent years had stemmed from their "chaotic ownership structure", a breakdown in standards in shareholders' behaviour and rampant illegal transactions.

Over the past three years, more than 3,600 illegal shareholders had been withdrawn and 27 billion shares that were illegally obtained have been transferred, the regulator said.

Regulators have also taken efforts to replenish smaller lenders' capital, it said. Authorities have issued 550 billion yuan special purpose bonds to replenish capital for more than 300 smaller banks over the past three years, it said.

(Reporting by Ziyi Tang and Ryan Woo, Editing by William Maclean)