HoHoHo: Chinese banks look sick

Profits for the Industrial & Commercial Bank of China (ICBC) and China Construction Bank both grew at less than half a percent. Industry-wide, nonperforming loans rose to 1.67% of total loans last year, up from the previous year. BBC report

Temasek has significant stakes in both.

Worse, FT reports: State-owned asset managers have been buying up distressed industrial debt in what could be the start of a bailout of the banks. Chinese corporate debt is a hefty $15tn. The country’s 30 most leveraged large corporations have debt equivalent to 21 times their gross incomes.

Any bailout is likely to mean dilution in the stakes of non-state shareholders like Temasek.