Chinese banks’ surging lending to non-bank financial institutions such as fund managers may pose a “black swan” risk for the nation’s financial system, according to Royal Bank of Scotland Group Plc.
Lending to such firms had become “the biggest driver of overall credit growth,” Harrison Hu, the firm’s chief Greater China economist, wrote in a note Monday. Non-bank financial institutions include companies, such as brokerages and fund managers, that aren’t allowed to accept deposits, Hu said.
