Lessons from China's past banking bailouts

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Title: Lessons from China's past banking bailouts
Author: Xia, Le
Organization: Suomen Pankki
Bank of Finland
Department / Unit: Siirtymätalouksien tutkimuslaitos (BOFIT)
Institute for Economies in Transition (BOFIT)
Series: BOFIT Policy Brief
ISSN: 2342-205X
Series year: 2020
Series number: 3/2020
Year of publication: 2020
Publication date: 21.1.2020
Pages: 17
Subject (yso): pankit; luotot; riskit
Keywords: Bofit-kokoelma; Kiina; pankkitoiminta; maksuvaikeudet
Other keywords: China; banking; NPLs; bank restructuring
Abstract: China’s banking sector, particularly small and medium-sized banks, today face a headwind of asset quality deterioration. Revisiting Chinese bank rescues from the early 2000s, we examine how the authorities tackled a severe rise in non-performing loans (NPLs). Following a discussion on costsharing among government agencies in that fitful NPL clean-up, we identify policy measures most suited to dealing with the current NPL situation.
Table of contents: Abstract .. 3 Introduction .. 4 The rise of NPL problems at Chinese banks .. 4 NPL clean-up during 1999–2001 .. 6 Bank restructurings from 2002 onwards .. 8 The second round of NPL transfers .. 8 Additional capital injection from Huijin .. 10 Foreign equity participation .. 10 NPL clean-up costs .. 11 Bank restructuring and public debt .. 12 Conclusions and policy suggestions .. 13 References .. 15
Rights: https://helda.helsinki.fi/bof/copyright


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