In a banking sector where regulators are tightening their grip on shadow banking and illicit activity to deflate China’s debt bubble, the divergence between the country’s strongest and weakest banks is widening.
This is good news for China’s large lenders, including the big four banks: Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), China Construction Bank (CCB) and Bank of China. But the smaller banks, whose business is often linked to the city or region they are based in, could run into trouble as their asset quality and capitalisation levels tend to be weaker and their reliance on wholesale deposits tends to be higher.
