China's major commercial banks have a funding issue outside Beijing's control: They're running low on the U.S. dollars they need for activities both at home and abroad. The combined dollar liabilities at the big four commercial banks exceeded their dollar assets at the end of 2018, their annual results show-a sharp reversal from just a few years ago.
Back in 2013, the four together had around $125 billion more dollar assets than liabilities, but now they owe more dollars to creditors and customers than are owed to them.
Once the holder of more net assets in dollars than any other Chinese lender, it ended 2018 owing about $70 billion more in dollar liabilities than it booked in dollar assets.
The other three lenders actually finished the year with more dollar assets than liabilities, though Industrial & Commercial Bank of China IDCBY -1.11% had a deficit at the end of 2017.
In its annual report, Bank of China says that its asset-liability imbalance is more than addressed by dollar funding that doesn't sit on its balance sheet.
It isn't just that the country's banks are lending dollars overseas, though it doesn't help that Belt-and-Road projects are overwhelmingly financed in the U.S. currency.
Investors should keep an eye out for stresses in dollar funding markets.
https://www.wsj.com/articles/chinas-banks-are-running-out-of-dollars-11556012442
Back in 2013, the four together had around $125 billion more dollar assets than liabilities, but now they owe more dollars to creditors and customers than are owed to them.
Once the holder of more net assets in dollars than any other Chinese lender, it ended 2018 owing about $70 billion more in dollar liabilities than it booked in dollar assets.
The other three lenders actually finished the year with more dollar assets than liabilities, though Industrial & Commercial Bank of China IDCBY -1.11% had a deficit at the end of 2017.
In its annual report, Bank of China says that its asset-liability imbalance is more than addressed by dollar funding that doesn't sit on its balance sheet.
It isn't just that the country's banks are lending dollars overseas, though it doesn't help that Belt-and-Road projects are overwhelmingly financed in the U.S. currency.
Investors should keep an eye out for stresses in dollar funding markets.
https://www.wsj.com/articles/chinas-banks-are-running-out-of-dollars-11556012442
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