Fitch warns China banks face big 'bubble risk'
Fitch Ratings warned Wednesday that banks in China face the greatest "bubble risk" of any Asian country, one day after it downgraded two mid-sized Chinese banks due to the rising threat of bad credit.
The agency's comments in an Asia-wide assessment of the banking sector come as concerns mount that Chinese banks may be headed for trouble over bad debt after a record lending spree last year.
"The agency views 'bubble risk' as greatest for Chinese banks given their 32 percent loan growth in 2009; this looks likely to be followed by a further 20 percent in 2010," Fitch said in a statement.
"Credit growth of more than 50 percent over a two-year period in an economy where bank credit is already quite large relative to gross domestic product almost inevitably involves some misallocation of credit," it added.