RISK MANAGEMENT

Fitch: Foreign Banks' China Exposure Hits Record High

Foreign banks' mainland China exposure (MCE) reached a new high in 1H17 and is likely to rise further, said Fitch Ratings recently.

Tight onshore liquidity conditions are likely to continue to support offshore borrowing in the short term, while trade growth, integration of the Hong Kong and Chinese banking systems, and weak profit opportunities in some banks' domestic markets will continue to drive a rise in MCE over the longer term, the credit rating agency oberserved.

The recovery from a sharp drop in MCE in 2015 has gathered momentum this year. Total MCE of foreign banks grew by 13% between end-2016 and end-June 2017, taking it to USD1,885 billion, according to data compiled by Fitch. Full-year growth in 2016 was 5%. 

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