Investing Banking in Asia Beyond the Headlines
3 October, 2016
Divorce? It’s the Best Deal in China
5 October, 2016Euromoney, October 2016
China’s shadow banking industry is bigger than reported, more dangerous than understood – and probably can’t be stopped anyway.
These are some of the less-than heartening conclusions reached by CLSA’s head of China and Hong Kong strategy, Francis Cheung, the same man who in May said China’s banking sector’s bad debt ratio is really 15% when the big four banks reckon it’s about a tenth of that level. Cheung estimates shadow financing hit Rmb54 trillion ($8 trillion) in 2015, or 79% of GDP, compared to a commonly cited figure of 26% by the G20’s Financial Stability Board.
In itself, this isn’t a problem – financing by institutions outside the regulated banking system accounts for 59% of GDP on average among big jurisdictions, according to the FSB, 147% in the UK and over 1,000% in Ireland – but darker concerns lie behind the scenes.
Full article: http://www.euromoney.com/Article/3591657/Asia-banking-Chinas-shadow-monster-cant-be-stopped
