January 30, 2020 / 2:58 PM / a month ago

CORRECTED-Some Chinese banks could require "sizable recapitalization" - S&P Global

(Corrects to “Bank of Jinzhou” from “Jinzho” throughout)

LONDON, Jan 30 (Reuters) - A number of recently stress-tested Chinese banks could require sizable recapitalizations, credit rating firm S&P Global said on Thursday, singling out three - Bohai Bank, China Zheshang Bank, and Shengjing Bank - as potentially under pressure.

China’s central bank, the People’s Bank of China (PBOC), stress-tested 30 of the country’s largest banks last year, each with assets of more than 800 billion yuan ($115.87 billion).

“On analyzing the stress test results, S&P Global Ratings believes that some of the tested banks could require sizable recapitalization,” it said, comparing it to the recent cash injections into Hengfeng Bank and Bank of Jinzhou.

The report didn’t give an estimate of how large the recapitalizations might need to be but did flag same names.

“We identify Bohai Bank, China Zheshang Bank, and Shengjing Bank as under more pressure than other PBOC stress-tested banks,” it said, citing their significantly large ‘back acceptance’ (BA) exposure relative to their ‘asset ratios’ which was also a problem at both Hengfeng and Jinzhou.

“Location can amplify risks,” S&P added. “For example, Shengjing Bank is based in Liaoning province and Bohai Bank in the mega-city of Tianjin, two regions where the local economy is under pressure.” ($1 = 6.9040 Chinese yuan renminbi) (Reporting by Marc Jones; Editing by Tom Arnold)

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