Ernst & Young withdraws China NPL report – Richard McGregor

From the Financial Times (link)

Ernst & Young, the accountancy firm, has withdrawn a controversial report on China’s non-performing loans, saying its estimate of bad debts for the country’s big four state banks “cannot be supported and is factually erroneous.”

The announcement comes days after the report was attacked by the People’s Bank of China, the central bank, as “ridiculous and barely understandable” and at odds with the firm’s own auditing of Chinese banks.

See “China central bank calls NPL report ‘ridiculous’ ” (link)

An unusually forthright attack by China’s central bank on an international accountancy firm’s report on the country’s bad debt problem has re-ignited debate about the success of Beijing’s efforts to clean up the banking sector.

The People’s Bank of China strongly criticised the Ernst & Young report which asserted that China’s total liabilities for non-performing loans may be more than US$900bn, far higher than official estimates and outstripping its massive foreign exchange reserves.