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China bank capital recycling raises credit risks: Moody’s

August 30, 2010  

The practice of state owned agencies issuing bonds that are bought by local banks and using the proceeds to inject capital into the same lenders is an accounting trick that could raise risks in the financial sector, warns the US credit rating agency. Daniel Flatt reports.

The continued practice from Chinese institutions of recycling capital in the form of debt raising and equity injections contains unsavory credit risks attached to it, warns Moody’s credit rating agency.

Yi Zhang, Beijing-based credit analyst at Moody’s warned of...


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 SYNDICATED LOANS

Rank Bookrunner Value ($m) No. %Share
1 Industrial & Commercial Bank of China - ICBC 1,160 1 16.4
1 Bank of Communications Co Ltd 1,160 1 16.4
3 State Bank of India 964 3 13.6
4 Land Bank of Taiwan 400 7 5.6
5 Maybank Investment Bank Bhd 332 1 4.7
6 AXIS Bank 236 2 3.3
7 IDBI Bank Ltd 124 1 1.8
8 HSBC 92 2 1.3
9 BNP Paribas 92 1 1.3
10 First Commercial Bank Co Ltd 65 4 0.9
Subtotal 4,623 18 65.2
Total 7,090 32 100.0


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