China banks' shadow addiction needs harsher remedy

Bank of Jinzhou Co

02/09/2016 04:38

(The author is a Reuters Breakingviews columnist. The opinions 
expressed are her own.) 
    By Rachel Morarjee 
    BEIJING, Sept 2 (Reuters Breakingviews) - Recent curbs on 
lucrative shadow lending haven't done the job. Shadow loan 
portfolios at some smaller banks nearly doubled in the first 
half of this year. The $2 trillion business poses a growing 
threat to financial stability. Stronger medicine is needed. 
        
    Full view will be published shortly. 
     
    CONTEXT NEWS 
    - Mid-tier Chinese banks' shadow lending portfolios surged 
in the first half of the year, Reuters reported on Sept. 1, 
citing an analysis of official filings. The country's banking 
regulator has issued a number of directives to curb the use of 
opaque lending structures that are seen as a threat to financial 
stability. 
    - The shadow loan book at Industrial Bank rose 4.4 percent 
to 1.23 trillion yuan, equivalent to 63 percent of its normal 
loan book, according to Reuters calculations. China Minsheng 
Banking and China Zheshang Bank both reported an 86 percent rise 
in shadow loans, the fastest among their listed peers. 
    - Meanwhile, issuance of wealth management products climbed 
by almost 12 percent to a record 26.3 trillion yuan ($3.9 
trillion) in the first half of the year, according to figures 
from the state-run China Central Depository & Clearing Co.      
    - For previous columns by the author, Reuters customers can 
click on  MORARJEE/  
 
  
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Chinabond Statement  (Chinese)    http://www.chinabond.com.cn/Info/24438323 
Chinese banks' shadow loans grow despite regulatory glower    
 urn:newsml:reuters.com:*:nL3N1B02F6  
BREAKINGVIEWS - China's bank watchdog is pushing on a balloon    
  urn:newsml:reuters.com:*:nL4N1AE0TN 
BREAKINGVIEWS - China's shadow bank boom keeps zombie firms 
alive       urn:newsml:reuters.com:*:nL4N16I1Z5 
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 (On Twitter https://twitter.com/morarjee Editing by Quentin 
Webb and Katrina Hamlin) 
 ((rachel.morarjee@thomsonreuters.com;)(Reuters Messaging: 
rachel.morarjee.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA BANKS/SHADOW DEBT BREAKINGVIEWS