"This Is Probably Just The Beginning" - Chinese Banks Are In Big Trouble

Tyler Durden's picture

That's not supposed to happen...

With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China's bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms' stocks. However, as Bloomberg points out, as China’s deleveraging efforts cut into banks’ profit margins, rising base funding costs and interbank credit risk concerns have pushed banks' cost of borrowing beyond the rate they charge customers for loans for the first time in history.

As the chart above shows, the one-year Shanghai Interbank Offered Rate has exceeded the Loan Prime Rate, the first time this has happened since the latter was introduced in 2013.

“This is probably just the beginning” and interbank funding costs will rise further amid the drive to reduce leverage, said Xu Hanfei, chief fixed-income analyst at China Merchants Securities Co. in Shanghai.

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crghill's picture

Ho Lee Fuk

Som Ting Wong

Wee Too High

knukles's picture

Make up neglative sled on vorume.
   - Obiewan Tai Che Krugman

Occident Mortal's picture

But do these indices actually represent the cost of the actual loans?

Because we all know for example that LIBOR was whatever the hell the banks prop desk wanted it to be.

Are these Chinese indices just another couple of BS numbers?
Are we to assume Chinese numbers are beyond reproach?

Come on now.

knukles's picture

Everything in China is made up.

So Close's picture

Kyle Bass is salivating.  Ain't done yet but he can smell the aroma.

OpenThePodBayDoorHAL's picture

LOL Kyle Bass versus entities that can materialize "money" from thin air with police and armies to back them up. In a country that can swap debt for equity in the blink of a eye without anyone moaning "but oh, capitalism".

Love the Bass-man but he's from an era when there was such a thing as "Mr. Market"

BrutusTheBomber's picture

What happened to the days when the Chinese just put pee-pee in our coke? Now they tank our markets. This isn't a good joke. 

Fish Gone Bad's picture

Ebola went away in 1 day. Look, its fixed!

Lower Tones's picture

The markets won't be tanked for long. Remember, there's a plan being put in place that will revitalize the economy!
Student loan recovery will soon be exposed to bankruptcy declarations. That'll free up some cash HAR!

karenm's picture

Notice that these "crises" go as fast as they came, and always come to nothing. That is no coincidence. Been going on for years now. Bears are being worn to the nub, purposefully being worn out and tired out. If you are a bear and think this is a ponzi, you are a dissenter and need to be dealt with.

This is the current method of dealing with you.

Buck Johnson's picture

China is about to collapse, news at 11.


coast1's picture

In my opinion,  China will be fine....Its the united states an the eurozone that are in trouble...I will stick around but I am tired of zerohedge, I have outgrown them now, but I like the comment section....for instance, if you have 23 minutes to listen to Duterte, you will see that the world is going towards Russia and China....I know many here do not have time for 23 minutes, but I took the time and glad I did.....listen to what this guy has to say...it is amazing....TAKE THE TIME... zrohedge is not my "to go to" place anymore, but I will post comments now and then k?  Duterte also says that Trump is trying but he is facing the deep state....etc


SunRise's picture

Where's your goto place now?


coast1's picture

I dont have one...I trust in a higher place that leads me to my next destintion...If you remember, in the Bible how so many traveled hundreds of miles from one place to the next, having no idea what tomorrow would bring...The Duarte interview came from Russia Today, which I do enjoy...I have no clue where to go, I just know when to leave...I know when to brush the dust from my feet...Not putting zerohedge down, not leaving, just hoping, with all of their audience, they will take it more seriously...many here complaing about Trump not going full blown, but say nothing about zerohedge doing click bait articles....

Global Hunter's picture

coast1 the tone of your post is gay and you should stop being a bitch.

That link was amazingly good and I am very glad I watched it thank you.  My opinion of Duerte has gone up a lot and I was getting goosebumps at the end.  The man is on a mission. 

coast1's picture

I know....I need to tone down my atitude a bit...thanks for the constructive criticesm.. I need to relax and be coast, and not let my emotions get to me...Your comment is well taken, and I will work on it.....I am getting kinda tired lately...I also thought the interview was amazing, glad you liked it.   And I need to learn to not feed the trolls.....I think it time for coast to go listen to "comfortably numb" by pink floyd  :)

SunRise's picture

That link with the Duarte interview is echoing quantity sentiments around the world and in the United States.  Thank You!

I agree that Zerohedge is YELLING TOO LOUD!!!.  If there's a mountain say so,  but don't keep screaming mountain, then report a molehill.


peopledontwanttruth's picture

I've been a poster here for 5-6 weeks but have been here for 7 years. I applaud you in your higher place search. The articles here can be quite contradictory at times but agree that the Bible is our key to peace. Always loved Christ words in Jn 17:17, your Word is truth. Even here as they're many times plagerizing the articles it's becoming an outlet for fake news regurgitated. He has never failed me in 38 years of my search. I'm into deep prophecy and with the original language have seen what I feel the HSPIRIT taught me, the things we are seeing today I came to these conclusions years ago from the scriptures. I know I'll get down voted but as Paul said only his opinion of me counts, not even my own of myself. We are in for a real storm in the near future and I'd rather have no other place than our safe zone with our Creator and His Son.

Hold your head high for your stand
If you don't stand for something you'll fall for anything.

Peace brother

SuperRay's picture

Trump is trying? Trying to do what?  Steal more from the middle class for his wall street jew buddies? He's a joke, a really bad one.  I just pray Hillary gets prosecuted for Seth Rich and goes to jail for the rest of her disgusting bitch life.

coast1's picture

I know superray....damn I dont know what to think about Trump...This is a very difficult time trying to figure it out...If Hillary would have won, it would have been so easy to figure it out...But with Trump?  I dont have a clue...i know he does things that piss me off, but other things,...ah crap, I am gonna get off Trump for another few months and see what happens...Altho,we all need to speak our minds when we think he is fucking up...I hear ya thos superray....The link I provided kinda helps bit but for now, I dont know what to do

null's picture

Trying to make those whose opinions don't really matter believe that he is a joke. Obviously.

nmewn's picture

You are right, we are unworthy of your 16 week oldness. We hardly got to know you.

Well...bye ;-)

coast1's picture

actually, I have been here for several years....i was coast...I had nothing but tons of up arrows, but got banned...have no clue why, I am smart and treat people with respect... so I came back as coast1.. your comment however, was not nice, but I forgive you for your ignorance, you have now learned...My post also said " I am not leaving"...I will remember your name, and will disregard your ignorace in future posts...I urge you to take time and learn more...Its exhausting, and sometimes I feel like giving up, but I think its worth it overall...I wish you the best of luck...Try to be more of an input person with good and interesting comments, rather than putting others down...thanks, and luv

nmewn's picture

Dude, you are saying a youtube video changed your life (or something). Nothing wrong with sharing with the crowd but try not to come off as a stuck up passive-aggressive prick and you might make it somewhere else. 

Or...hang around...and...read the next ZH article...its all relative ya know grasshopper, lifes full of choices ;-)


coast1's picture

more putting down people instead of adding intelligence for people to learn..and why would I trust Moodys?  Are you kidding?  I am going to go for the night, I see trolls are in full effect tonight....fibbing about my posts, putting me down, adding comments that have no relevance...we are being trolled...night all....tired of the lies of these people...they wnt to live in the matrix, and thats fine with me..I am all set up off grid, trained and ready for anything, and have a city dwelling, cheap to enjoy the city while its still here..I dont need to put up with idiot that bring no info, or solutions, or enlightment, they just twist my words and lie....enjoy your matrix...night all...luv

 And I will probably be banned again by you weirds in 3...2...1..

Last1Out's picture

Hang in there Coast. It's the early morning, the darkest time before the sun rises on a new day. We are in the first hour of the seventh day. Be a shame to give up on it now...

Justin Case's picture

Many people don't realize that China doesn't owe foreign countries money like merika.

The amount of debt China owes foreign lenders is approaching the $1 trillion market. The country has over $3 trillion in cash reserves. More than enough to service its borrowing or wipe it out entirely and still have a few trillion left over for a rainy day.

China is not a large overseas borrower, but is seen increasing its use of foreign capital markets in the years ahead as the economy matures.  By comparison, the U.S. total debt obligations are over $17 trillion.

KimAsa's picture

Unless there is a currency crisis.

Davilis's picture

Many people don't realize that China is creating mountains of internal debt, converting some of it to external "money", and buying assets around the world. They figured out it's one big ponzi and so they are playing the game harder than everyone else. When their internal debt bubble pops and the yuan falls through the floor it won't matter -- they will already own everything they need to come out on top of the global reset. Ha ha, the joke is on us.

83_vf_1100_c's picture

  Only 16 weeks and you are tired of ZH already? Where the hell else can you find quality chart and doom porn?

  Duterte thinks China is his new bud? He'll be speaking Chinese in a few years if China gets their way.

Fish Gone Bad's picture

Duterte has got balls of steel.  Anyone who will execute all the drug dealers and addicts must be Vlad-the-impaler re-incarnated. Unfortunately, he will die in a ___________ accident as do so many others who decide to fight with the big dogs.  John Perkins, Confessions of an Ecomic Hit Man, lays it out like it is.  The players change, but the game does not.  Drugs are worth big $$$ if Duterte hasn't figured it out yet.

Doppelganger71's picture

Hory shet...........................

RSDallas's picture

Folks, let's remember that this is communist China.  The government will merely absorb the losses if they get to bad.  This stage is liken to my first grade teacher spanking my hand with her ruler.  We'll see???

robertocarlos's picture

That's my plan C retirement fund. Sue the government for beating me in grade school. I swear a dog ate my homework.

Justin Case's picture

It's difficult to find very many reasons to label China as communist these days. The ruling party in China still calls itself communist. The international media still likes to refer to China as communist. But where is communism still manifested in China today? Where are the basic Communist values of sharing and equality evident in Chinese society now? They cannot be found. Quite simply, China is no longer a communist country.

Some people just can't understand that China now employs capitalist and socialist economic policies! Its ridiculous! How can people be so stupid! China has been reforming from communism for 30+ years now. So many people never change their mind, but never over something so stupid! its not like this is up for debate, 10 minitues on google will show anyone that China is no longer 100% communist.

China is, indeed, going through a transition, but it is not a transition from capitalism to communism. The evidence supports a conclusion that feudal appropriation has prevailed in both agriculture (during the commune-era) and industry (during the SRE-era) in the recent past and is now being displaced by capitalism in industry and increasingly in agriculture. In other words, China is going through a transition from feudalism to capitalism. I just don’t see calling such a transition socialism.

It's time to update yoar fictional mindset and resist fake news narratives of demonizing labels of countries the administrations cannot conquer.

trutalk's picture

I visited a friends factory in China around '98. He was not Chinese and he had 2500 employees there. I asked him how this was possible since China is a communist country. He replied that China is much more capitalist than the USA. America is practically a socialist country by comparison. It was a real eye opener. Soon after that visit the big Chinese economic and manufactoring boom exploded. He was so right. We are swapping places. It has been transitioning for years. China is business friendly. It works.  

Davilis's picture

We are the same, except in China the oligarchs and nepotists rule in the open while elsewhere they hide behind a facade of politics and media. In China, Dick Cheney would be a ruling member of the party. It's more efficient to function in the open so yes, they are beating us.

Oldwood's picture

What the fuck is capitalism? China is full blown autocratic and their capitalistic success is based on that control, absolute protectionism and government control of every business, every bank. The fact that the US has much of the same is only differentiated by pretense. 

In a world of free competition, China proves that absolute corruption wins over those still pretending to be free of it. Progressives remind us daily that our only salvation is full and absolute corrupt crony central government control. This is what makes corruption so prolific, that it always wins over honesty, honor and transparency. If we choose to trade with nation's like China we have no choice but to be as China. The only way to win against corruption is to simply refuse to participate or cooperate. 

Davidduke2000's picture

When I was a toddler I used to laugh at my twin brother because he peed in his diaper , while I had pooped in mine according to my late mom. guess who is laughing at the Chinese banks because they peed their diapers??? 

null's picture

The analogy might hold better if brother said he peed in his diaper but really pooped in ... his twin's diaper. Clever but unsustainable.

BrutusTheBomber's picture

Over my head.

I cashed out on Thursday.

Too much crazy stuff going on right now. I just didn't like the vibe I'm getting. Also +/- 6 months to a new president (not incumbent) taking office, the market tanks. Has done this since b4 the Great Depression. Look at the historical data. It's right there.

CJgipper's picture

But that was before teh PPT was assembled.

FlKeysFisherman's picture

Jim Rogers is always talking about the great investment opportunities in China but I've never heard him once address the horseshit government data and the rampant corruption.

There's no way he's that naive. In other words he's another shuckster who's getting sweetheart deals from the Chinese government to talk them up.

Davidduke2000's picture

I hope you know the us  owes China money. 

Stormtrooper's picture

We'll print it up as soon as they ask us for it.

kochevnik's picture

I sought solar panels from China.  But nobody could explain the materials, or how to connect them.  The answers depend upon the bypass diode wiring.  Also their flat panels use cheap Pepsi bottle plastic.  This becomes dust after one year.

China is a nation of clones and copying machines, in the shape of humans