Famous investor Kyle Bass, one of the few to bet against subprime mortgages right before the collapse, expects turmoil in the Chinese banking industry due to bad loans.
China’s 134 city commercial banks have been taking on more and more risk, throwing capital into questionable investments, at the same time as bad loans are on the rise. And the warning signs are already here—China Resources Bank of Zhuhai reported a 90% loss in profit last year after nearly tripling loan-loss provisions, Bloomberg reports.
“It’s a smoldering bonfire,” says Keith Pogson at Ernst & Young. “If the wind changes and inflames it rapidly it could burst into flames quite easily.” [Bloomberg]
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