After the crunch: The future of China’s banks

Chinese banks face an uncertain future after a credit crunch last month laid bare their vulnerabilities and the government demonstrated keen determination to push through reform of the financial system.

China’s sprawling banks are now in the government’s crosshairs, and the coming months will see their entire business model up for discussion.

Since taking office in March, China’s new leaders have said repeatedly they will unleash market forces to rein in excessive lending and improve the banking system’s performance.

Reforms being mulled include more interest-rate liberalisation and greater exchange rate flexibility.

At the same time the government is trying to wean companies off bank loans by bolstering capital markets as an alternative venue for them to raise cash. Analysts are also forecasting the introduction of a safety net for depositors if any small banks...

¬ Haymarket Media Limited. All rights reserved.

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