{"id":24038,"date":"2017-05-23T19:09:46","date_gmt":"2017-05-24T00:09:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24038"},"modified":"2017-05-23T19:11:46","modified_gmt":"2017-05-24T00:11:46","slug":"this-is-probably-just-the-beginning-chinese-banks-are-in-big-trouble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24038","title":{"rendered":"“This Is Probably Just The Beginning” – Chinese Banks Are In Big Trouble"},"content":{"rendered":"

“This Is Probably Just The Beginning” – Chinese Banks Are In Big Trouble<\/a><\/h3>\n
<\/section>\n
<\/div>\n
\n
\n

That’s not supposed to happen…<\/em><\/strong><\/p>\n

With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously<\/a>, China’s bond curve is inverted, yields are surging, <\/strong>and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms’ stocks. However, as Bloomberg points out, as China\u2019s deleveraging efforts cut into banks\u2019 profit margins, rising base funding costs and interbank credit risk concerns have pushed banks’ cost of borrowing beyond the rate they charge customers for loans for the first time in history. <\/strong><\/p>\n

<\/a><\/p>\n

As the chart above shows, the one-year Shanghai Interbank Offered Rate has exceeded the Loan Prime Rate, the first time this has happened since the latter was introduced in 2013<\/strong>.<\/p>\n

\u201cThis is probably just the beginning\u201d <\/em><\/strong>and interbank funding costs will rise further amid the drive to reduce leverage, said\u00a0Xu Hanfei, chief fixed-income analyst at China Merchants Securities Co. in Shanghai.<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

“This Is Probably Just The Beginning” – Chinese Banks Are In Big Trouble That’s not supposed to happen… With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China’s bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15348,3186,15349,130,6876,15350,4318],"class_list":["post-24038","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-curve","tag-bond-yields","tag-borrowing-rates","tag-china","tag-shadow-banking","tag-shanghai-interbank-offered-rate","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24038"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24038\/revisions"}],"predecessor-version":[{"id":24040,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24038\/revisions\/24040"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}