China Debt Headache Swells as Bank Breaches Bad-Loan Buffer
- Bank of China's coverage ratio falls below 150% for first time
- IMF staff members warn China bad-loan plan may backfire
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A slide in Bank of China Ltd.’s bad-loan buffer to below a regulatory minimum added to signs that the authorities could be set to loosen standards for how the country’s banks provision for a growing mountain of nonperforming credit.
“The regulator is probably tolerating such a temporary breach and a cut in the ratio is on the way,” said Hou Wei, a Hong Kong-based analyst at Sanford C. Bernstein & Co. Bank of China might have disclosed a flat or declining first-quarter profit, rather than the 1.7 percent increase it reported Tuesday, if it had maintained its buffer at the approved minimum, he said.