China's biggest lenders poised for windfall from rising rates

Beijing

AS China ramps up its quest to conquer leverage, the banking sector is finding out that being a big fish pays - literally.

While smaller lenders grapple with soaring money-market rates - some are said to have defaulted amid the tight liquidity - their larger counterparts are poised for a windfall. Bigger banks are benefiting from higher borrowing costs given their status as net lenders in the interbank market, a situation that has Citigroup Inc to Morgan Stanley favouring their shares. Large bank stocks have already returned double that of their smaller brethren so far this year.