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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: RealMuLan who wrote (17344)12/1/2004 10:55:37 PM
From: RealMuLan  Read Replies (1) of 116555
 
Industrial Bank of China Needs a `Long Time' to Fix (Update2)
Dec. 1 (Bloomberg) -- Industrial & Commercial Bank of China the country's biggest bank, and Agricultural Bank of China, the fourth-largest, will need ``a long time'' to clear bad loans and restore capital, China's top banking regulator Liu Mingkang said.

``There is a huge gap in terms of the stock of non- performing loans'' at the two lenders and those of Bank of China and China Construction Bank, which were each given $22.5 billion to cut bad loans at the end of 2003, Liu said in an interview in Beijing. He wouldn't give a timetable for a bailout of the two weaker lenders.

``To design an effective and efficient tailor-made reform package for Industrial & Commercial Bank of China and Agricultural Bank of China it takes a long time,'' he said.

Industrial Bank said in an August statement that unless a reorganization is complete by the end of 2006 it will become a ``burden'' to the financial industry. China's top four banks had 1.56 trillion yuan ($188 billion) in bad loans on Sept. 30, 15.7 percent of total lending, a figure that is swelling as the government moves to slow the economy.

``The government is aware of that but there are other considerations and one is they want the banks to show some efforts to reform themselves before they get public money,'' said David Marshall, managing director at Fitch Inc. in Hong Kong. ``If they don't get there, then by implication, their reforms will lag behind the other two banks and the burden they pose to the state will remain and possibly become greater.''

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bloomberg.com
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