China's 14.1t yuan of shadow lending in rust belt poses contagion risks
This is a sleeper issue, says an analyst; Chinese banks' non-performing loans could be three times higher than the officially published level
Shanghai
REGIONAL banks in China's rust-belt provinces are driving the rapid expansion of shadow banking in the country, fuelling a web of informal lending that poses wider risks to the financial system, according to a study by UBS Group AG.
Smaller rust-belt banks like Bank of Tangshan Co and Baoshang Bank have been using products such as trust beneficiary rights and directional asset-management plans to hide the true state of their bad loans and circumvent lending restrictions, the study by analyst Jason Bedford said. Others have been using the shadow loan instruments to diversify away from lending in their struggling home provinces, exposing themselves to a much wider spectrum of Chinese corporate risk in the event of a default, according to the report.
TRENDING NOW
US dollar falters after Iran’s offer to reopen Hormuz sends oil lower
He built the Vingroup empire. Now South-east Asia’s richest man is handing some key roles to his sons
Floods compound Philippine growth woes from public-works scandal
Tokyo reverses baby bust with AI matchmaking and generous subsidies