Warnings of Risks to China Banks

From the New York Times:

A week after the Agricultural Bank of raised nearly $20 billion from global investors in one of the biggest stock offerings in , analysts are warning about growing risks to China’s banking system.

A report released on Wednesday by Fitch, the ratings agency, said were increasingly engaging in complex deals that hid the size and nature of their lending, obscuring hundreds of billions of dollars in loans and possibly even masking a coming wave of bad and infrastructure loans.

The report also said that Chinese regulators understated loan growth in the first half of the year, by 28 percent, or about $190 billion, and that many banks continued to secretly shift loans off the , creating a “pervasive understatement of credit growth and credit exposure.”

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