(Hong Kong Comprehensive News) As the risk of local economic breach of local economic breach increased, local governments spent hundreds of billions of yuan to reorganize capital for small banks with cash shorts.
South China Morning Post on Saturday (September 30) quoted the US Credit Rating Agency Standard Square Global Rating estimation that so far this year, the Chinese local government has borrowed 152.3 billion yuan (RMB, the same below, 28.5 billion yuan), which is Liaoning., Small banks in Gansu, Inner Mongolia, Henan, and Heilongjiang fill the balance sheet.The agency said that the total amount of borrowings of Chinese governments in 2022 was 63 billion yuan.
China Financial Supervision officials have strengthened supervision of small loan institutions since 2020.The People's Bank of China also listed 366 financial institutions as "high risks" last year, including urban commercial banks, rural commercial banks and village and township banks.
Reports pointed out that insufficient liquidity of local banks in China may trigger the instability of the state -owned financial system, reduce credit supply in the real economy, and may affect the extensive industry.
Zhu Suzheng, a senior director of Global rating of S & P, analyzes the South China Morning Post. System stability is the primary task of the Chinese government.However, if the local governments are full of debt, or banks' performance is not enough to maintain future repayment, local governments may not consider supporting small banks through special bonds.
She said that the central government may adopt other alternative interventions when needed, but banks with poor prospects and not threatening financial stability may still fail.
Special bonds are a bond for the issuance of Chinese local governments for specific policies, infrastructure projects, or solving specific problems.Since 2019, special bonds have increased significantly each year, and the actual number of new special bonds in 2022 has exceeded 4 trillion yuan.
The China's Monetary Policy Implementation Report released by the Bank of China in February this year showed that from 2020 to 2022, China ’s new 550 billion yuan local government bonds were added to supplement the capital of small and medium -sized banks.According to Standard Purcera, 74.7 billion yuan in the current quota.
Reporting for example, China ’s financial supervision officials took over the urban commercial bank contractor banks in Baotou, Inner Mongolia in 2019, but the bank still declared bankruptcy one year later.The Bank of China also rescued Jinzhou Bank and Hengfeng Bank in 2019.
Since then, the central bank has promised to reduce the number of high -risk financial institutions, and the integration between small banks promoted by local governments has been continuously strengthened.
The International Credit Institution Moody's Investor Services Senior Credit Officer Zhu Shuning told the South China Morning Post that the purpose of small banking integration is to better disperse risks, but the question is whether the risk is sufficient to increase the capital adequacy ratio.
Zhu Ning estimates that as of the end of 2022, 550 billion yuan of special bonds accounted for about 0.9%of the weighted assets of local banks.Risk -weighted assets are used to determine the minimum capital that banks must hold.
Reporting to quote Luo Zhiheng, chief macroeconomic analyst at the Department of Research of the Guangdong Securities Research Department, said that the role of local governments in the regional economy is increasing, including the risks in the field of small banks, which may exacerbate the financial issues of local governments.Many local governments relying on land -selling income have been hit hard due to the real estate crisis.
