In the 1990s, significant discussion arose concerning stability and the strength of China's banks. Of special concern were the debts owed to the banks by state-owned enterprises (SOEs). Many SOEs were experiencing financial problems and so they mightn't have been able to repay these loans. Some analysts emphasized that, since the SOEs and the banks were both possessed by the authorities, the only important concern was the financial strength of the government and its preparedness to take responsibility for any of the banks' non-performing loans.
Prior to 2010, this procedure provided a generally approved religion in protection and the stability of China's banks. Total of the non-performing loans as a per cent of entirety bank loans diminished from 20 per cent in 2003 to three per cent in the year 2008. The year 2010 brought a brand new realization of the non-performing loan problem that had reappeared. Yet, the banks of China now had government shareholders including private, and thus the solution had become more complex. The government's response was to insist that China's banks increase their capital base by issuing new equity.
PUBLICATION DATE: September 03, 2010 PRODUCT #: 910M78-HCB-ENG
This is just an excerpt. This case is about GLOBAL BUSINESS
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