What’s new: Financial regulators in eastern China’s Anhui province said 15 small and medium-sized banks there face high risks from bad loans following an anti-graft crackdown sweeping through local rural banks.
The 15 institutions with high risks held a combined 27 billion yuan ($4.13 billion) of nonperforming loans as of the end of 2019, the Anhui branch of the Ministry of Finance said in an article published Wednesday. Those banks’ nonperforming assets amount to 77.9% of the total of nonperforming loans in Anhui's banking system. The banks face a total capital shortfall of 23.2 billion yuan, the Finance Ministry unit said.
The background: Most of the risky banks flagged by the regulator are rural institutions that account for a major part of Anhui’s banking system, Caixin learned. The province’s 83 rural lenders were rattled by a corruption crackdown this year that has brought down 11 senior officials and executives in the local rural credit system.
The crackdown was followed by a nationwide plan to overhaul China’s vast rural credit system. The central bank in a November report said an assessment of more than 4,000 financial institutions during the fourth quarter 2019 identified 545 highly risky institutions, mostly rural lenders.
Related: Exclusive: China Takes Another Step Toward Fixing Its Corruption-Plagued Rural Credit Unions
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
