S&P: Risks Surfacing At China's Small Banks...>

CHINA: S&P: Risks Surfacing At China's Small Banks

- Some of China's small and midsized banks are less equipped to deal with

slowing economic growth and tightening financial regulation in the country. As a

result, sector problems are more likely to emerge among smaller banks, S&P

Global Ratings said today in a report, titled "China Credit Spotlight: The

Coming Exit Of Struggling Banks."

- Credit divergence in banking was brought home this year with the Chinese

government's takeover of Baoshang Bank in May and a coordinated effort to

bolster the troubled Bank of Jinzhou in July.

- "We anticipate more difficulties will likely surface over the next year for

China's smaller banks, and some weaker institutions will exit the market," said

S&P Global Ratings credit analyst Liang Yu.

- Small and midsized banks have had to rein in asset growth in order to preserve

capital as they adjusted to tightening regulations. Many such institutions

tended to be more reliant on "shadow banking" and interbank business, and are

thereby more vulnerable to the clampdown on activity in that realm.