When Baoshang Bank published its most recent annual financial statement in mid-2017, it claimed to have a non-performing loan ratio of just 1.68 per cent.
Two years later, Baoshang, which has Rmb576bn ($83bn) in assets, has been taken over by the government because of its “serious credit risk”, the first such move in 18 years and a reminder of the hidden perils lurking within China’s financial system.
The need for a state rescue has raised questions about financial contagion. It has also led to worries that regulators may have allowed a destabilising build-up in bad debt to go unchecked for far too long.
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