Caixin
FINANCE

For China Banks, Two Roads Diverge

By Wu Hongyuran, Han Yi, Wu Xiaomeng, Leng Cheng and Liu Xiao
Smaller banks are hit by the authorities’ recent tightening of mortgages and local-government financing, while major banks are still going strong. Above, a Bank of China building in Ningbo, Zhejiang province on Aug. 23. Photo: Visual China
Smaller banks are hit by the authorities’ recent tightening of mortgages and local-government financing, while major banks are still going strong. Above, a Bank of China building in Ningbo, Zhejiang province on Aug. 23. Photo: Visual China

The government’s battle against leveraging will likely deepen the divide in China’s banking sector.

The interbank market, where banks and financial institutions trade assets and lend to each other, has been a key target in the country’s campaign to curb systemic risks and excesses. As interbank rates as a result jumped nearly 200 basis points from December through June, less-capitalized banks were less profitable during the first half of this year as they paid more for borrowed funds to make loans. Larger banks that sit on massive customer deposits, on the other hand, enjoyed higher margins from their being lenders in the interbank market.

You've accessed an article available only to subscribers
Try 4 weeks for $0.99
SUBSCRIBE
Share this article
Open WeChat and scan the QR code
Copyright ?2017 Caixin Global Limited. All Rights Reserved.