Some Chinese banks could require "sizable recapitalization" - S&P Global

Shengjing Bank Co

30/01/2020 14:22

LONDON, Jan 30 (Reuters) - A number of recently
stress-tested Chinese banks could require sizable
recapitalizations, credit rating firm S&P Global said on
Thursday, singling out three - Bohai Bank, China Zheshang Bank,
and Shengjing Bank - as potentially under pressure.
    China's central bank, the People's Bank of China (PBOC),
stress-tested 30 of the country's largest banks last year, each
with assets of more than 800 billion yuan ($115.87 billion). 
    "On analyzing the stress test results, S&P Global Ratings
believes that some of the tested banks could require sizable
recapitalization," it said, comparing it to the recent cash
injections into Hengfeng Bank and Bank of Jinzho. 
    The report didn't give an estimate of how large the
recapitalizations might need to be but did flag same names.
    "We identify Bohai Bank, China Zheshang Bank, and Shengjing
Bank as under more pressure than other PBOC stress-tested
banks," it said, citing their significantly large 'back
acceptance' (BA) exposure relative to their 'asset ratios' which
was also a problem at both Hengfeng and Jinzho. 
    "Location can amplify risks," S&P added. "For example,
Shengjing Bank is based in Liaoning province and Bohai Bank in
the mega-city of Tianjin, two regions where the local economy is
under pressure." 
($1 = 6.9040 Chinese yuan renminbi)

 (Reporting by Marc Jones; Editing by Tom Arnold)
 ((marc.jones@thomsonreuters.com; +44 (0)207 542 9033; Reuters
Messaging: marc.jones.thomsonreuters.com@reuters.net  Twitter
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