China Targets Smaller Lenders in Latest Shadow Banking Crackdown
- Lenders need to apply for license or close unlicensed units
- Rust-belt banks driving expansion of shadow banking in country
The Lujiazui Financial District in Shanghai.
Photographer: Johannes Eisele/AFP via Getty Images
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China announced plans to rein in the expansion of lending by the nation’s regional banks to areas beyond their home bases, the latest step policy makers have taken to defend against financial risk in the world’s second-biggest economy.
Those lenders, which include rural cooperatives, must have the proper licenses to provide financing beyond the region where they’re based, or else must wind down those businesses, the China Banking and Insurance Regulatory Commission said in a statement Saturday. That includes setting up units in regions where the banks have no branches.