A $647 billion blind spot in financial reporting by China’s city and rural commercial banks is fueling investor concerns that more of the country’s lenders face government intervention or collapse in the wake of the state takeover of Baoshang Bank, reported the Financial Times.
Baoshang was one of 19 banks with a combined RMB 4.47 trillion ($647 billion) in assets that have yet to publish 2018 financial results, according to a list compiled by Barclays.
The delays are a potential sign of a build-up in non-performing loans and leave investors blind to how many of those assets may have turned into bad debt, as was the case with Baoshang, analysts said. Inner Mongolia-based Baoshang Bank published its most recent annual report in mid-2017.
Citing “severe credit risks,” the government took over the institution late last month, the first such intervention in 18 years and a sign that some banks in the country are experiencing a severe deterioration in asset quality.