atans1

Our world class Chinese banks need US$50-500bn more in capital

In Banks, China, Temasek on 12/09/2013 at 4:56 am

This blog has been pointing out why ang mohs don’t like Chinese banks, while Temasek loves them.

This short video shows the strengths of Chinese banks in size and income from interest (Big 4 in global top 10). The latter must surely be a consideration in why Temasek invests in three of them.

http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-1

Now back to the worrying analysis:

— With bad loans and competition rising, China’s largest banks face tougher times ahead. ChinaScope Financial, a research firm partly owned by Moody’s, a ratings agency, has analysed how declining net interest margins will affect China’s banks. It estimates that the sector will need an injection of $50 billion-100 billion over the next two years just to keep its capital ratios at today’s level. The managements of the Big Four realise this, and have won approval from their boards to raise over $40 billion in fresh capital over the next two years. But Andrew Sheng of the Fung Global Institute, a think-tank, reckons the sector will need to raise even more later: up to $300 billion over the next five years.

http://www.economist.com/news/finance-and-economics/21584331-four-worlds-biggest-lenders-must-face-some-nasty-truths-giant-reality-check

— China’s bad debts could blow a $500 billion hole in bank balance sheets. That’s roughly how much extra equity the eleven biggest lenders might need if 10 percent of their loans went sour, according to a Breakingviews calculator.

http://blogs.reuters.com/breakingviews/2013/09/04/chinas-bad-debt-could-leave-500-bln-equity-hole/

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  1. Thank you for this article,which gives me an opportunity to remind the elites in Temasek to be careful about their huge punt with our money on China banking sector .
    The current hot subject in China financial sector is Internet Finance.The following 2 videos give fair information about the Internet Finance initialed by billionaire Jack Ma,the ex- high school teacher who founded Alibaba.
    Alibaba set to snub US with HK listing – FT.com
    http://www.ft.com/cms/s/0/47a47a60-c7a6-11e2-be27-00144feab7de.html#axzz2eeFVz7AF
    China Internet Finance major Tangled Warfare 互联网金融大混战 1309 05
    http://v.youku.com/v_show/id_XNjA1NTU3ODgw.html

    Internet Finance challenges China major Banks 互联网金融挑战银行 130825
    http:// v.youku.com/v_show/id_XNjAwOTM4NzE2.html

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