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China Bank's Capital Almost Wiped Out as Loan Rules Tighten

  • Guiyang Rural’s capital adequacy ratio falls below 1 percent
  • Raises new doubts about health of smaller Chinese lenders
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A surge in bad loans has nearly wiped out the capital of a Chinese rural bank, according to a local ratings firm, raising fresh doubts about the financial health of the nation’s smaller lenders.

Guiyang Rural Commercial Bank Co., based in the southwestern Guizhou province, was downgraded by China Chengxin International Credit Rating Co. after its non-performing loans rose to 7.8 billion yuan ($1.2 billion) in 2017 from 841 million yuan two years ago. That caused the lender’s capital adequacy ratio to fall below 1 percent, compared with 11.8 percent at the end of 2016, Chengxin said in a statement dated June 29.