The amount of nonperforming loans at 24 of China’s listed municipal and rural commercial banks cumulatively rose by 20.31% year-on-year to RMB 99 billion (about $14 billion) in 2019, largely driven by bad loans at banks in northeastern China and the region including Beijing and the port city of Tianjin, according to a report published Friday by global accounting firm PricewaterhouseCoopers (PwC), reported Caixin.
Vincent Yao, a financial services partner at PwC China, said during a conference the same day that local governments in China may push for more mergers and acquisitions between banks if the financial risks of regional small-to medium-sized banks keep rising.
Several banks in China, including the troubled Baoshang Bank Co. Ltd. and Bank of Jinzhou Co. Ltd., have conducted reforms following government’s guidelines last year. On Wednesday, an official at the China Banking and Insurance Regulatory Commission (CBIRC) said the organization will roll out more measures this year to promote the reform and restructuring of small and midsized banks.
“Against the backdrop of strengthened (government) efforts, rising (nonperforming loan ratios) indicate that some municipal and rural commercial banks are under greater pressure to deal with bad loans,” said Shirley Yeung, another PwC China financial services partner.