Four Chinese banks – China Everbright Bank (6818.HKG, 601818.SHA), China Minsheng Bank (1988.HKG, 600016.SHA), China Merchants Bank (3968.HKG, 600036.SHA) and Bank of Communications (3328.HKG, 601328.SHA) – are leading the charge in the margin lending craze that has helped fuel mainland stock markets’ ongoing rally, South China Morning Post reported, citing an unnamed source at a mainland securities broker. While industry-wide exposure to the roughly RMB1.9 trillion (US$306.4 billion) in mainland margin lending is estimated at around 7% of total off-balance-sheet lending, the four banks were said to have much higher exposure. “It’s become a larger and larger component of their wealth management lending, especially for Everbright,” the source said. “Their risk controls are weaker than the big four banks.”
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