Better policy to facilitate sustainable growth is likely to drive a boom amongst China’s banks in the private sector, according to Chinese media reports, which hinted at an acceleration of private lenders entering the market.
According to the media report, a bank in the Henan province is seeking approval by year-end and a number of other hopeful lenders in regions like Shanxi are also making preparations.
The country currently has 17 privately-owned banks across the country – of which only one is operating in the red – and the 18th will soon be established after regulators gave the green light in May to a bank in the Jiangxi province.
Sustainable Growth
Following China’s decision to allow private banks in 2014, the sector has lagged in 2017 and 2018 amid a nationwide deleveraging campaign but will now reform the financial system to reverse the trend to «better serve the real economy,» according to «Xinhua» report.
Regulators are expected to apply close scrutiny to the balance sheets and business operations within the banking sub-sector especially as this group of lenders reportedly had «limited capital supplementary tools, high debt costs and lack of proper corporate governance».
