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Another Chinese Bank Nears Collapse, Showing Weakness of the Financial Sector

Trouble?

Last month, I wrote about the collapse of Baoshang Bank in China, which sent shockwaves through China’s financial system. Zero Hedge and other news sources speculated at that time that other banks could be at risk, and that Baoshang wasn’t alone.

Sure enough, one of the banks they mentioned, the Bank of Jinzhou, seems to be nearing collapse and is seeking a bailout from the government:

China’s Bank of Jinzhou, which suspended trading in its shares earlier this year and saw its auditor quit, said on Thursday that it is in talks with multiple parties for possible strategic investment, and that it is operating normally.

The statement on the bank’s website triggered fresh jitters about the health of smaller banks in China’s northeast, after regulators took over Inner Mongolia-based Baoshang Bank on May 24, rattling China’s interbank markets and sending some firms’ borrowing costs spiking.

Thursday’s statement, on the bank’s website, follows a Reuters report late on Wednesday that officials from the local branch of China’s central bank and other regulators had recently met financial institutions in Liaoning province to discuss measures to deal with liquidity problems at the lender.

“This is a bigger bomb than Baoshang,” he said, adding that he sees Jinzhou’s woes as a likely trigger for problems at other banks in northeastern China, which already face relatively high funding costs in the interbank market.

Bank of Jinzhou has delayed the release of its annual report for 2018, and its shares have been suspended since April. The lender’s auditor, EY, had quit before signing off on the bank’s 2018 accounts in June, after being unable to agree with the bank on usage of some loans.

 
Doomberg

Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

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