11:12 - 23.07.2024

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July 23, Fineko/abc.az. China's banking sector is experiencing a serious crisis. In just one week, 40 banks disappeared, and the collapse of Jiangxi Bank of China further exacerbated the sector's problems. Experts warn that the situation could have serious consequences for the global economy.

Earlier, Jiangxi Bank reported that its profit could fall by 30% due to problems with repayment of loans by customers.

It is noted that about 3,800 banking institutions are under threat in China.

Their total assets amount to $5.7 trillion, which corresponds to 13% of the country's banking system. These banks have been poorly managed for a long time and have accumulated a huge number of problem loans.

Many of them lent money to developers and local authorities, exposing themselves to the crisis in the real estate market. In recent years, some banks have discovered that 40% of their portfolios are non-performing loans.

China's main strategy with regard to small, weak banks is to "absorb" them. Of the 40 institutions that have recently disappeared in this way, 36 have been absorbed into Liaoning Rural Commercial Bank.