Small banks struggle to stay healthy


Both Tianjin and Tianjin Binhai are small, private companies very rarely covered by research houses and rating agencies. Details of their business activities are therefore scarce, but the latter made headlines several times over the last few years for its financial problems.

In 2014, the bank had illegally used company money to buy off-balance sheet asset management products issued by Hengfeng bank, according to a report by Caixin Global. It was also one of the creditors for Bohai Steel Group, which struggled with its 192 billion yuan ($29.95 billion) debt.

Rural commercial banks such as Tianjin and Tianjin Binhai account for 13 to 14 percent of the total assets and liabilities in China’s banking system, according to statistics by the China Banking Regulatory Commission. They may be small, but they could pose risks to China’s economic progress, a Financial Times opinion piece noted in May.

Such banks depend highly on their local economy to keep their businesses going. Tianjin province, for its part, recorded the smallest growth among China’s 29 municipalities and regions last year. It grew 3.6 percent in 2017, which was down sharply from the 9 percent in the previous year.

LEAVE A REPLY

Please enter your comment!
Please enter your name here