- The Lobby
- Extra Times
Major banks losing deposits: report
Deposits are flowing out of China’s major state-owned banks as high inflation and low interest rates prompt savers to seek better returns in the private lending market, Chinese state media said yesterday.
Outstanding deposits at the four biggest banks – Industrial & Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China – fell 420 billion yuan (USD 65.7 billion) in the first 15 days of this month, the China Securities Journal said, citing unnamed sources.
The banks were not immediately available for comment when contacted by AFP.
Much of the funds likely flowed into the private lending market, which offers borrowing rates around 10 times higher than the official deposit rates and has become increasingly popular as authorities tighten restrictions on bank lending, the report said.
Inflation has been hovering above six percent for months, nearly double the official benchmark one-year deposit rate of 3.5 percent, meaning savers have been losing money by parking their cash in the country’s banks.
The sharp fall in deposits has severely restricted the amount of money banks can lend, the report said, making it even more difficult for privately owned small and medium-sized companies to borrow.
Smaller businesses have already been hit hard by government efforts to rein in inflation, which include forcing banks to set aside more money in reserve and hiking interest rates five times since October last year.
The booming private financing market has fuelled concerns over the potential for an explosion in defaults, which could hurt the country’s financial system and social stability, a commentary in the Shanghai Securities News said.
“Once companies fail to pay pack their loans due to the heavy pressure of high interest rates, large portions of private funds will be totally lost,” said Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, a government think tank.
Responsible Right of Expression — In the interest of freedom of expression, coupled with a true sense of responsibility to encourage community dialogue, the Macau Daily Times offers its readers the opportunity to express their opinions on new-related matters through this website. All opinions are welcome. However, we reserve the right to remove comments that are deemed to be obscene, or are merely insults written under the cloak of anonymity. MDT
- Residents less than satisfied with environment
- Boxing ‘Featherweight Fury’ hits Macau with three world title fights
- MSAR asks Beijing for territorial waters and land from Hengqin
- AS REPORTED BY MDT: Neptune owner’s wife detained following tightened grip on junkets
- IFT and Dusit Thani College partner to organize exchange program
- Gov’t to launch guidelines for water supply in residential buildings
- CE ELECTIONS: Electoral College voting procedure to take place across five locations
- BRIEFS: Concrete falls on Rua do Campo, one injured
- GAMING: Average daily run up 15 pct last week
- Increasing household income and the vanishing smiles
- France meets Asia in Justin Quek’s kitchen
- KW Director calls for universal healthcare insurance
- Australia continues to supply dogs to Macau Canidrome despite country ban
- BRIEFS: CE to answer questions in AL today
- Hac Sa Beach Labor Day Concert expects 10,000 attendees