Probability of the bank crisis in China by the middle of 2013 is estimated at 60%. As Bloomberg reports, Richard Fox, Senior Manager of the Fitch rating agency, has announced about it.
According to the rating agency experts’ information, systemic crisis can be caused by the growth of credit volumes and real estate dramatic prices increase. Under the systemic crisis Fitch means the necessity of the whole banking system pre-capitalization and a great number of local financial organizations’ defaults.
As Fox says, all conclusions concerning the probable crisis in China were drawn according to MPI results (macroprudential indicator). It has already helped Fitch to notify investors about likely problems in banking systems of Ireland and Iceland.
During recent months Chinese government was regularly taking measures intended to reduce credit growth rate and real estate prices. Particularly in China, basic rate is gradually increasing and reservation regulations for banks are becoming tougher. In 2010 local financial organizations were prohibited to get loans to the amount of more than 7.5 trillion Yuan (1.1 trillion US dollars). It is 22 per cent less than credit volumes in 2009.
Fitch’s apprehensions have not affected Chinese market yet. So, Hang Seng Finance Index, which includes five Chinese banks, had increased by one and a half per cent by the middle of the trading session on the 8th of March.
