Chinese bank losses are projected to exceed the US and Western Europe combined

The coronavirus pandemic is poised to set off trillions of dollars of bank losses, a large chunk of which are forecast to implode at Chinese lenders.

Losses at global banks are projected to soar by $926 billion to $2.1 trillion through 2021, according to Standard & Poor’s. Almost $400 billion of that increase is forecast to come from Chinese institutions, compared with a $360 billion increase for those in North America and Western Europe combined. While an impending wave of soured loans isn’t expected to cause a credit crisis, the forecast demonstrates the economic pain that’s anticipated from heightened unemployment and bankruptcies.

China’s outsize losses reflect the sheer size of its mammoth banking sector which, in terms of customer loans, is as big as the US, Japanese, German, and UK systems combined, say S&P analysts. That’s in part because China’s financial system is less diversified than the likes of the US, where the corporate bond market provides trillions of dollars of financing that doesn’t rest on bank balance sheets.


Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Michael Flynn: Appeal court to re-hear case of ex-Trump aide

Fri Jul 31 , 2020
A US appeals court has agreed to re-hear arguments over efforts to drop charges against ex-National Security Adviser Michael Flynn, one of several Trump associates convicted of lying. Flynn, a former three-star US general, was the highest ranking official snared by the special counsel inquiry into Russian meddling in the […]