China’s weakest banks hold 20 per cent of all banking assets and are categorised by an appetite for regulatory arbitrage, significant liquidity risks, and questionable asset quality.No matter where a crisis might start, it will end with currency devaluation.
The share of loans to total assets provides an indication of how large a bank’s involvement with estimates involvement with non-bank credit intermediation. In the weakest banks, only 35 per cent of total assets are loans.
What is the remainder? Many Chinese banks evade loan-to-deposit ratio requirements by disguising risky loans as investments on their balance sheets. This means that traditional banking indicators radically understate risk for some Chinese banks.
Macro Afternoon
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The BOJ meeting came and went without any surprises this afternoon, easing
concerns for Japanese stocks while Chinese issues continue to lift higher
desp...
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