26 Mar 2014
Chinese banks turn more selective to take on risk
FXStreet (Bali) - Reuters reports that Chinese banks are starting to act more cautious in the wake of further default talk in the country, leading to more selective lending and scrutiny in documentation.
In recent times, Reuters has been in touch with over 80 businesses with elevated debt ratios or overcapacity issues, with the result being that "interviews with 15 that agreed to discuss their funding showed that more discriminate lending, long a missing ingredient of China's economic transformation, has become a reality", Reuters notes.
Reuters adds that "there are signs that even state-owned firms, in the past fawned over by lenders for their government connections, have to contend with higher rates, lower lending limits and more onerous checks by banks." The article quotes Wang Lei, a finance dpt manager at PKU HealthCare, who said "interest rates are going up 10 percent for the entire industry... obtaining loans is getting difficult and expensive."
In recent times, Reuters has been in touch with over 80 businesses with elevated debt ratios or overcapacity issues, with the result being that "interviews with 15 that agreed to discuss their funding showed that more discriminate lending, long a missing ingredient of China's economic transformation, has become a reality", Reuters notes.
Reuters adds that "there are signs that even state-owned firms, in the past fawned over by lenders for their government connections, have to contend with higher rates, lower lending limits and more onerous checks by banks." The article quotes Wang Lei, a finance dpt manager at PKU HealthCare, who said "interest rates are going up 10 percent for the entire industry... obtaining loans is getting difficult and expensive."