China bank plays down credit boom risk

China's largest bank lent Rmb640bn ($98bn) to local governments in the post-crisis credit boom, but insists these loans do not pose a danger to the country's banking system.

In an interview with the Financial Times, Jiang Jianqing, chairman of Industrial and Commercial Bank of China, the world's biggest bank by market capitalisation, acknowledged that unbridled lending to development companies controlled by local governments did carry some risk for the economy.

The development companies now account for 10 per cent of ICBC's loan book. In the aftermath of the 2008 global financial crisis, Chinese banks roughly doubled their lending activity.

"It is important that people pay attention to this problem and we should be alert to the risks," Mr Jiang said. "[But] I don't believe this problem poses a systemic risk to the Chinese banking system." (read more)