China Banks

Money won't flow into property or commodities.
Likely flow to stock markets

China's banks ready to write off billions
Angus Grigg and Ben Potter
831 words
23 Feb 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Shanghai | China's state-owned banks are about to begin the painful process of writing off billions of dollars in bad debts, as Beijing seeks to avoid Japanese-style stagnation from a failure to address problem loans.

Accounting firms are among those preparing for a spike in bad loans this year and fear it may further destabilise China's already-slowing economy.

"They are going to start taking the pain this year," said Keith Pogson, Ernst & Young's senior financial services partner in the Asia Pacific.

"There will be an accelerated recognition and writing-off of bad loans."

China's banks have provisioned for $260 billion in losses, but many analysts believe the true figure could be double this, or around 5 per cent of all loans extended.

A hint of the pain to come was evident when China's mid-tier banks released preliminary results in early February, showing a sharp increase in problem loans and a drop in profits.

China's credit bubble is often cited as the country's No 1 economic problem and many investors, including the giant AustralianSuper, have limited their exposure to Chinese assets until the issue is resolved.

In opting to address the problem, policymakers in Beijing are betting that taking some pain now will put the economy on a more sustainable footing.

"There's no doubt it's still going to cause some disruption to the system, but the way they will manage it will, I think, lessen the impact," said Peter Nash, chairman of KPMG in Australia.

He said the management of China's bad loans was a major topic of discussion during a recent partners meeting in Hong Kong and the big accounting firms were gearing up for the sale of bad-loan portfolios and to deal with debt workouts.

"It's almost like the government knows there's a significant backlog of these non-performing loans that need to be cleared and will release them for workout periodically so it keeps the system stable," he said.

Early signs of Beijing confronting the issue were evident when China's mid-tier banks released their preliminary earnings results earlier in the month.

China Merchants Bank, China Minsheng Bank and Citic Bank all reported a spike in operating expenses and slowing profits, as they booked larger charges for bad loans.

Minsheng said its non-performing loans increased from 1.04 per cent to 1.17 per cent over a single quarter.

A fuller picture of these bad loans will be revealed when mainland banks start reporting in March.

Despite a rapid accumulation of debt since the 2008 global financial crisis, China's banking regulator said in December that bad loans stood at just 1.29 per cent. Neither the country's banking regulator nor the central bank has ever acknowledged that problem loans could be well above what has been officially reported.

Beijing's efforts to clean up the banking system come at a time when policy makers are dealing with myriad other economic issues, including slowing growth, a weak property market and capital flight.

It is likely to mean a further slowing of credit growth, which at 13.6 per cent in January was the weakest on record.

The weak credit numbers have already been blamed for contributing to a 50 per cent fall in the iron ore price over the last year and a further contraction is likely to hurt economic growth in Australia, which is reliant on China for more than 30 per cent of exports.

"It will provide a level of distraction [for banks] and also just dampen their capacity in the marketplace," said KPMG's Mr Nash.

The move to clean up the banking system is also driven by a desire to partially privatise smaller regional lenders, which are most exposed to indebted local governments.

China has reported low levels of non-performing loans in recent years due to a practice known as "ever-greening". This involves rolling over problem loans or giving debtors time to pay.

Though this makes balance sheets look healthy on paper, it restricts a bank's ability to inject capital into new projects or fund innovative business.

Japan's refusal to bankrupt many of its large companies in the early 1990s has been blamed for the country's two decades of stagnation, as businesses were not forced to cut costs and realign.

"China does not want to fall into the same trap as Japan," said ANZ's chief China economist, Liu Li-gang.

"It should be seen as a positive thing that Beijing is willing to address the problem."

Ernst & Young's Mr Pogson said scheduled changes to accounting standards in 2018 were another factor in China's greater recognition and of bad loans.

He said the system will change from an "incurred loss" model for bad loans to one based on a bank's "expected losses".


Fairfax Media Management Pty Limited

Document AFNR000020150222eb2n0001r

China Unveils System to Insure Depositors If a Bank Fails

(Beijing) – China has unveiled a system to insure the majority of bank deposits in an effort to save the government from having to bail out troubled lenders using taxpayer money.

The system will offer full compensation for anyone with up to 500,000 yuan or the equivalent in foreign currencies in a bank starting on May 1, the State Council, the country's cabinet, said on its website on March 31.

http://english.caixin.com/2015-04-01/100796878.html

China moves to tighten control over policy banks
LINGLING WEI THE AUSTRALIAN APRIL 13, 2015 6:57AM

China’s government is strengthening control over the country’s three major policy banks to position them better to support new initiatives to finance projects and corporate expansions abroad and to help stabilise growth at home.

The State Council, China’s cabinet, has released approvals for reform plans at the banks: China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China. While lacking in detail, the plans seek to reverse an increasingly commercialised strategy pursued by at least two of these banks and reinforce their role as a financing tool of the Chinese government, according to government advisers and analysts.

The State Council stressed the banks’ roles in supporting government policies and strategic goals. The plans also call for the banks to improve their risk management and internal controls.

With China’s economic growth slowing and its commercial-banking sector struggling with rising bad debts, the government is looking to the policy banks to reinforce support for key objectives. “These policy banks are being counted on to provide low-cost loans to finance things that often prove unattractive to commercial lenders, like infrastructure, farms, exports and overseas investments,” said economist Zhu Chaoping at UOB Kay Hian Holdings Ltd., a Singapore-based brokerage firm.

Topping the agenda for China’s leadership are ambitious plans to finance roads, railways, ports, telecommunications networks and other infrastructure to better connect the Chinese economy with the rest of Asia, Africa, the Middle East and Europe. The initiatives go under several rubrics used by President Xi Jinping, such as the Silk Road Economic Belt for overland Asia and the 21st Century Maritime Silk Road for the seaboard links. All are meant to evoke the trade routes that carried goods to and from China for centuries, and are seen by regional governments and policy analysts as illustrating China’s ambition to challenge the US on international affairs.

As part of the effort, China has established a $US40 billion Silk Road fund and spearheaded the setting up of a new development bank, the Asian Infrastructure Investment Bank, which has attracted interest from more than 40 countries including staunch US allies and which is expected to begin operations with $US100 billion in capital.

“A big question for us is how we finance the ‘One Belt, One Road’ plan and make it work,” one of the government advisers said. “And that’s where the policy banks come in.”

Press offices at the three policy banks didn’t respond to requests for comment.

For most of the past two decades, China’s major policy banks had one mission: to help carry out Beijing’s economic orders and support Chinese companies when they expand overseas. In recent years, at least two of the three — China Development Bank and Export-Import Bank — have moved beyond these original roles to aggressively pursue commercially oriented deals, such as financing leveraged buyouts in foreign markets.

China Development Bank has stepped into some of the biggest private deals in Asia, lending money to e-commerce company Alibaba Group Holding Ltd., Hong Kong Exchanges & Clearing Ltd. and Indonesia’s PT Bumi Resources. Export-Import Bank, meanwhile, has sought to fund the construction of expensive condominium towers in Manhattan and financed a multibillion-dollar casino resort in the Bahamas.

The State Council statement released yesterday calls on China Development Bank to “play an active role” in stabilising China’s growth. The bank has already taken steps to re-establish its status as the go-to bank for government priorities. Last year, with the blessing of the Chinese leadership, the bank established a new department headed by an official with the rank of vice minister to specialise in financing low-cost public housing and received a one-trillion-yuan loan, about $US161 billion, from the central bank for that purpose, according to people familiar with the matter.

Going forward, the development bank, with more than eight trillion yuan in assets, is expected to get involved in Beijing’s efforts to solve its mounting local-government debt problems, according to some Chinese officials and analysts. China recently has launched a program to alleviate the debt-repayment burdens of local governments by allowing localities to sell new bonds to replace some of their existing debts, which are mostly short-term bank loans with relatively high interest rates. The bank is expected to be asked to purchase the new bonds at some point when localities begin issuing them as a way to keep down the interest rates on those bonds, the officials and analysts said.

For the Export-Import Bank, which has nearly two trillion yuan in assets, the State Council plan requires it to focus on its main role of financing Chinese exports and implementing China’s strategy of encouraging the country’s businesses to expand overseas. To help the bank reinforce its policy-bank role, Beijing recently shook up its top management by appointing Hu Xiaolian, until earlier this year a vice governor of the central bank, as its new chairman.

With some 2.7 trillion yuan in assets, Agricultural Development Bank so far has largely stuck to its mission of financing Chinese agricultural companies and food producers. The State Council statement nonetheless called for the bank to better separate its for-profit business from its main business and to focus on the latter. The goal is to make it a “sustainable” policy bank, according to the statement.

For all three banks, the State Council emphasised the need to strengthen corporate governance.

“As their exposure to overseas markets increases, risk control will be a challenge,” Mr Zhu of UOB Kay Hian said.

Wall Street Journal

a recent article on shadow banking for leisure reading, section 3 got a read up with regards to shadow banking in china

(08-10-2014, 03:22 PM)freedom Wrote: China banks lend RMB and issue RMB deposit. The capital is also in RMB. Why would it need foreign currency for capital or doing business domestically again? Foreign reserve is for a different purpose. If you need import foreign product and the counter party does not like your currency as a payment, you get the currency the counter party asks and buy the product. Or you can find a seller who accepts your currency.

A huge difference between the coming China financial crisis(if it comes) and Asian Financial crisis is that China banks do not borrow much in foreign currencies and China has a bankruptcy law and is willing to execute it.

(08-10-2014, 04:28 PM)specuvestor Wrote: You can see ICBC interim report June 2014 as a proxy on page 159 on FX risk, and page on 45/46 on their discussion for international assets. They are just 7% of assets but this figure is bound to grow much more strongly with internationalisation of RMB, and bearing in mind the context of RMB1.35tr in capital for RMB20.3tr of assets.

I thought it is apt to follow up with the snippets of discussion we had a year ago on foreign currency exposure... international exchang rate exposure and opportunities to Chinese banks will continue to grow and they will have to manage that risk while taking on the opportunities.

(Bloomberg) -- Chinese banks’ rising syndicated lending is
boosting their rankings in global loans mandated lead arranger
league tables.

* BOC, one of the big 4 state-owned commercial banks, has
climbed to 21 in YTD global loans MLA table, from a ranking
of 35 or below in 2009, 2010, 2011, according to Bloomberg
data
*
* Outside of Asia, BOC is ranked 30 in U.S. MLA league
table, 29 in EMEA MLA
* Other Chinese banks are also scaling the MLA league tables:
*
* ICBC, world’s largest bank by mkt cap., jumped to 38 YTD
from 61 in 2014 in global loans MLA league table
* CCB rose to 40 from 70
* Chinese lenders’ share in global syndicated loans jumped to
$126b last yr from 2013’s $101b; number of deals increased
by 50%: Bloomberg data
*
* Volumes have come a long way since 2011’s $36b
* Click here for chart
* “What prompted this aggressiveness in syndicated lending is
increasing interest of Chinese companies to invest overseas
and hence demand for offshore loans,” says Andrew Mao,
China Merchants Bank NY’s deputy general manager
* The mkt is poised for another record yr as volumes rose to
$53.76b YTD, compared with $49b in same period 2014


STRUCTURED DEALS

* Chinese banks are increasingly taking on lead roles in
global loans, thanks to home-grown cos venturing out
* BOC, along with China Merchants Bank, is arranging $800m
loan for OmniVision buyout by a Chinese consortium
* BOC also syndicating a $1.93b leveraged loan backing buyout
of Philips Lumileds
* China Merchants Bank sole-led $900m financing backing online
game developer Perfect World’s privatization, and a smaller
similar loan for Sungy Mobile’s take-private deal
* “At present, the role of Chinese financial institutions in
supporting Chinese enterprises to integrate into the world
economy is increasingly prominent, particularly when cos.
accelerate their move to make investment abroad” says
Christy Xiao Zhuo Wang, BOC’s Beijing-based head of
syndicated loans


MORE PRIVATIZATIONS

* ~$30b of outbound event-driven transactions by Chinese cos.
are in the pipeline: Bloomberg data
*
* ~27 of approx. 150 deals are for Chinese cos.’ U.S.
take-private transactions
* Cos. see a lot more value listing in Asia, and can raise
funds easily from their domestic relationship banks, says a
Hong Kong-based head of acquisition and leveraged finance
with a U.S. bank
*
* Banker cited Focus Media’s recent $1.4b refinancing led
by Chinese banks that paved way for the advertising
firm’s China listing
* “We keep an open mind to more complex financing structure
and diversified financing source for cross-border
transactions, and we are willing to provide tailored
financing terms to meet clients’ needs and adopt
international market practice:” BOC’s Wang


LEADING CORP. LOANS

* Chinese banks are also increasing their arranging share in
global corp. loans
* ICBC London, ranked 48th bookrunner in YTD EMEA Loans league
table, has led a dozen deals in the region YTD as
bookrunner, whilst stepping up for significant tickets as
MLA
* “The market has been talking about the rise of Chinese
banks for a few years now, but we are now making this
happen,” says Benny Zachariah, ICBC London’s head of
syndications and sales
*
* Zachariah says ICBC plans on taking bigger and more
prominent role in all syndicated financing as Chinese go
international
* ICBC bought Standard Bank’s London-based global mkts
business in Feb., extending their lending business
*
* ICBC also in process of acquiring Turkey’s Tekstilbank,
and setting up Saudi Arabia branch

Why Chinese banks refuse to fight for deposits

• PETER CAI
  
• BUSINESS SPECTATOR
  
• OCTOBER 29, 2015 8:11AM
  

[b]China’s central bank finally lifted the cap on deposit rates last Friday, marking the end of a decades-old policy of financial repression. The move means Chinese banks are now free to set their own interest rates.[/b]
The new policy allows the market to allocate financial resources, one of the most important factors of production in the modern economy. This breakthrough is one of the few bright spots in an otherwise bleak outlook for China’s reform agenda.
However, does the newly liberalised interest rate environment mean the Chinese banks will start a new deposit war to attract customers? The answer is unlikely, at least for the short term.
The deputy governor of the central bank, Yi Gang, has made it clear that the end of administrative control over the deposit rate does not mean the bank wants to relax its control over the interest rate.
In fact, he said the bank wanted to strengthen its control over the interest rate. Yi’s message is the government wants to use more effective market mechanisms to influence the setting of interest rates. The deputy governor says the central bank conducts regular open market operations to influence overnight and seven-day repurchase rates.
He warns that although the central government has removed the cap on deposits, it will be vigilant on the risk of potential competition between banks for savers. During the Asian Financial Crisis, some Chinese trust companies, brokers and rural credit unions offered high interest products to depositors without regulatory approvals. Yi has vowed to prevent that from happening again.
At the moment, the central bank does not want to see deposit rates go up, which will certainly lead to higher lending costs. This is contrary to one of the central bank’s overriding objectives, which is to reduce the cost of funding for a struggling corporate sector saddled with debt.
More importantly, Chinese banks of different sizes will react differently in the newly liberalised environment. Past experience suggests the big five state-owned banks, which include the Bank of China and the Industrial and Commercial Bank of China, are unlikely to join the fight for depositors.
The five big collectively control 40 per cent of the domestic banking sector’s assets and they have the largest branch networks in the country. Their solid reputations and established stable deposit base will give them a competitive edge on household deposits. For example, when China first relaxed its controls on the deposit rate back in 2012, none of the big five altered their rates, while all the medium-sized joint-stock banks lifted their rates to the maximum allowable limit.
After the latest change, all big five banks have kept their deposit rates at 1.5 per cent, which is the benchmark rate, underscoring their reluctance to engage in a war for depositors. It seems they are more interested in protecting their margins than boosting their deposit base.
One unnamed banker told Reuters that “given the current weak loan demand, to increase deposits only means to increase the cost of credit for banks”.
For the more nimble and better managed joint-stock banks, including privately controlled and partially foreign-owned banks, they have already set their deposit at 2 per cent, 30 per cent higher than the 1.5 per cent benchmark rate. However, even these banks are reluctant to hike deposit rates further in a bid to attract more savings.
This leaves the smaller banks — which are most vulnerable in a liberalised environment — to increase their deposit rates. However, these banks are also the lenders least prepared to issue more risky loans as they lack expertise and resources to judge counter-party risk. In addition, the central bank also has them in its sights.
In addition, wealth management products and online financial products offered by the likes of Alibaba and Tencent have already attracted a lot of savers looking for higher returns. For example, Alibaba and Tencent offer deposit rates of between 3- 4 per cent, which is considerably higher than what is offered by the banks. The so-called wealth management products offer even higher returns.
So the new policy is unlikely to have a short term impact on deposit rates. However, over a longer period, banks will more opportunity to offer differentiated products and services to China’s savers.

Chinese 'low-level' banking crisis biggest threat to global economy
DateNovember 13, 2015 - 11:26AM

• 5 reading now
  
  
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[Image: 1444795415899.jpg]
Mark Mulligan
Senior markets and economy writer


China is on the verge of a "credit event" that authorities will tightly manage to maintain the country's financial stability, says JPMorgan's chief Asian and emerging markets equity strategist.
Hong Kong-based Adrian Mowat says a surge in corporate debt in the final years of China's infrastructure drive poses the biggest threat to banks' balance sheets.
A government-led bond market refinancing of loans taken out by companies set up to carry out local government projects will prevent the restructuring from becoming a "Lehman-like credit event", he says, although banks will have to carry some of the load. 
Similarly, companies will pay off about $US550 billion in foreign currency denominated debt via cheaper, lower-risk and longer-dated refinancing in domestic bond markets, he says.
Corporate indebtedness in China has ballooned from about 60 per cent of gross domestic product in 2008 to 157 per cent at the end of last year, according to research compiled by the bank. This compares with 92 per cent in Japan, 69 per cent in the US and 94 per cent for Europe. 
In Brazil, a comparable emerging market, corporate indebtedness is worth just 64 per cent of GDP.
"What China will do is that it will have a low-amplitude credit event," says Mowat.
"The view is that having a very high-amplitude credit event, such as a Lehman's, is not considered a good idea at all.
"So we would see the Chinese banking system for a protracted time having high levels of provisions and a high level of write-offs," he said, "but all this will very much be controlled by the regulators."
Who will be 'allowed to fail'
Mowat agrees with a growing group of analysts that this low-level banking crisis, and not the sharp stock market correction of June and August, is what most concerns authorities and investors.
UK insurer Aviva's chief investment officer for fixed income Mark Connolly told The Australian Financial Review this week that more companies had to be allowed to fail as part of the modernisation of China's capital markets.
"Some of the state-owned enterprises and some of the property companies are clearly sources of significant risk for China," he said.
"The way that China deals with those and the extent to which they allow some of these entities to go bust and develop a real capital market as a result of these companies going bust is really interesting." 
Mowat attributed China's equity market routs in June and August partly to brokers trying to hedge their long positions by taking shorts. When regulators stepped in to ban short-selling in a bid to arrest the market declines, traders moved to the Hong Kong market, which was also dragged lower. 
Despite equity market volatility, China's transition away from manufactured exports, heavy industry and massive infrastructure spending to more consumer-led growth is throwing up stock opportunities for investors, Mowat says.
Most of these are in the areas of technology, travel, online shopping, cars and other businesses that will benefit from consumer spending as the People's Bank of China continues to lower interest rates.
"The consumer is in a good place to maintain some growth in the Chinese economy," he said.
However, the days of seemingly indefatigable demand for commodities from Australia and other resource exporters are gone, he says.
The demand for iron ore and coking coal for the country's massive steel mills is a case in point, says Mowat.
As claims of dumping from other steel-producing countries mount, China will be forced to cut its exports of surplus steel.
This means the steady demand for iron ore and coal that has allowed Australian mining groups to partly compensate for price declines in recent years will fall away.
"China's demand for other people's goods . . . started contracting from late-2014," says Mowat.
"This concept that China is the locomotive of global growth I think is a wrong concept."
 

• Nov 26 2015 at 6:16 AM 
   
  

Currency trader? Chinese banks want you

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[img=620x0]http://www.afr.com/content/dam/images/g/i/o/d/q/j/image.related.afrArticleLead.620x350.gl88lt.png/1448489051707.jpg[/img]Big banks in China on average raise salaries by 6-7 percent every year, while those in the U.S., Singapore or Australia usually offer only 2-3 percent, according to Michael Page. Bloomberg
by Bloomberg News
From London to New York, currency traders are clearing their desks as business evaporates. In Shanghai, new positions stay unfilled for weeks and prized experts are encouraged to put in overtime.
Frank Zhang, head of foreign-exchange trading at China Merchants Bank Co in the nation's financial capital, has been trying to hire three traders since October 16.
The local talent pool is too small, he says. His counterpart at Industrial Bank Co, Ye Yuzhang, is sweetening the deal with extra money for those who work late.
"It's not easy finding people with a strong foreign-exchange trading background here," said Zhang, whose desk now comprises of 15 people.

"The yuan was stable for such a long time, and the foreign-exchange business was much simpler. Traders now have to learn to deal with the increased movements of today's markets."
Chinese lenders are scrambling to strengthen their trading desks as the International Monetary Fund prepares to include the yuan in its reserves basket, a move that Standard Chartered Plc estimates could draw as much as $US1.1 trillion into Chinese assets in the next five years.
The hiring efforts became more urgent following a report that authorities will double the currency's trading hours in Shanghai, and after China's August 11 yuan devaluation pushed its volatility to a record high.
OPPOSING TRENDS


Shanghai Pudong Development Bank Co is hiring three traders to cover both currency and fixed-income, Bank of Nanjing Co plans to add two to its currency desk and Bank of Ningbo Co wants another 30 people for its financial markets department.
By contrast, Credit Suisse Group AG is laying off 200 traders in London. Deutsche Bank AG, Societe Generale SA and Standard Chartered are trimming staff in New York, France and Dubai.
Demand for foreign-exchange traders in China is being driven by the nation's efforts to open its capital markets, increase the yuan's global use and push for its inclusion in the IMF's Special Drawing Rights.
The very volatility that unnerved global markets after the August devaluation is making traders with experience and international exposure a prized commodity as clients turn to banks to hedge risks.

"We are seeing more business opportunities driven by corporate clients' hedging needs," said Zhang of China Merchants Bank, the nation's fifth-largest lender. "The market has now become more sophisticated and demand has become more diverse."
YUAN DECLINE
The People's Bank China kept the yuan at about 6.2 to the dollar from mid-March before the August devaluation triggered the biggest one-day drop in two decades.
The currency will weaken 5 per cent to 6.73 a dollar by the end of 2017, according to the median estimate in a Bloomberg survey. The forecast on August 10 was for a 1.5 percent gain. The onshore yuan was little changed at 6.3893 on Wednesday, while the offshore rate was 0.6 per cent weaker at 6.4257.

"There are only about 200 to 250 licensed currency traders in China," said Jackie Wang, Shanghai-based associate director at recruitment consultancy Michael Page.
"Local lenders can hire foreigners, but they have to pass a test conducted by the China Foreign Exchange Trade System.
It takes about six months to a year's time to study the regulations and then take the exam. Banks also need to explain to the government why they need to hire foreigners instead of Chinese."
PAY RAISE
Big banks in China on average raise salaries by 6 to 7 per cent every year, while those in the U.S., Singapore or Australia usually offer only 2 to 3 per cent, according to Michael Page.
Demand for traders will continue to be robust at least in the short term, said Thomas de Mendonca, regional director for the consultancy's east China services.
Even as profit growth at banks slowed and bad loans climbed, China's industry expanded its assets to 193 trillion yuan as of September, almost twice that in the US Industrial & Commercial Bank of China Ltd, the world's most profitable lender, alone made a net income of $US11.4 billion in the third quarter of this year, more than the combined earnings of Wells Fargo & Co and Bank of America Corp.
Bid-offer spreads of the world's major currencies declined as trade shrank. The mean spreads of the kiwi and krone are at levels unseen since the 2008 global financial crisis.
LONDON HIRING
Chinese lenders have recently increased efforts to extend their operations, including to London, which accounts for 40 per cent of global foreign-exchange trading and is seeking to become Europe's offshore yuan hub.
Bank of China Ltd set up a trading centre in the British capital in October during President Xi Jinping's first state visit to the nation. The lender, China's third-largest, says it plans to form a network connecting Beijing, Shanghai, Hong Kong, London and New York to prepare for round-the-clock trading.
ICBC's London unit posted a recruitment notice for foreign-exchange traders on its website at the end of May, with one of the requirements a willingness to work early shifts starting at 6am.
This comes as China moves to fulfil the IMF's demand that there be a suitable yuan exchange rate during London trading hours to determine the SDR's daily value against the dollar.
The central bank is planning to extend the yuan's trading hours by end-November to 11:30pm in Shanghai from the current 4:30pm, according to people familiar with the matter. That means the Chinese onshore market will be open after the noon SDR valuation in London.
IMF ENTRY
IMF staff recommended earlier this month that the yuan be added to the SDR, alongside the dollar, euro, yen and pound. The Washington-based lender's executive board is expected to vote on the inclusion on November 30 and approval is seen as all but certain as the fund's major shareholders including the US have said they'll support it.
"China's yuan internationalisation push poses a human resources challenge to the local financial industry," said Bai Rui, a Beijing-based partner at PXC Consulting, a human resources adviser.
"The industry was very much closed previously, and now there's the need to internationalise the talent. We are very optimistic about the opportunities.
Bloomberg

Will there be more pain to come before recovery ? 

------------------

Two Chinese local banks enter bankruptcy procedures (27 Aug 2022)
https://asia.nikkei.com/Business/Markets...procedures

China Minsheng Bank Interim Results
https://staticpacific.blob.core.windows....2709_0.PDF
"
Conditions of the industry
In the first half of 2022, China’s economic operation remained stable on the whole, but the operating environment became more complicated and severe. Due to the combined influences of tightened monetary policies in the developed economies, geopolitical conflicts and resurgences of the pandemic, the global economy struggled with high inflation and low growth. China’s economic development was confronted with pressures of shrinking demands, supply shock and weakening expectation. Since the second quarter, due to the sporadic outbreaks of the pandemic, market entities have faced more notable difficulties. In particular, medium, small and micro enterprises, some sectors and groups suffered relatively severer impact. New challenges were posed against stabilising growth, employment and price. Since June, as the pandemic prevention and control improved, a basket of policies to stabilise growth have been implemented, and the construction of major projects has been accelerated nationwide. China’s economy has shown signs of recovery, and the fundamentals of long-term positive growth remained unchanged...."