Article

2017-09-09 China-Japan-Koreas

[DAWN] China’s fifth-largest state-owned bank has had its credit rating downgraded to junk status by Moody’s, the latest sign of fragility in the country’s financial system.

The decision to downgrade Bank of Communications was based on the lender’s lack of customer deposits and over-reliance on expensive and volatile alternative sources of funding, Moody’s said Thursday.

It follows a Chinese government crackdown on banks using excessive leveraging, including unregulated "shadow banking".

"Moody’s review on BoCom was triggered by the bank’s increasing reliance on wholesale funds in recent years and declining profitability," said the credit ratings agency in a statement on Thursday.

The downgrade was driven by BoCom’s "weaker funding profile when compared to other state-owned Chinese banks," particularly weaker deposit holdings, it said.

Posted by Fred 2017-09-09 00:00|| || Front Page|| [11133 views ] Top

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