On August 21, 2013, 21cbh.com, a professional financial news website under the 21st Century Media Group in Guangdong Province, published an article on the increasing financial black holes in Jiangsu Province. Over 10 heads of bank branches have been removed from their positions or held legally responsibile for financial black holes in the steel trading market. From January to June 2013, the number of bad loans in Jiangsu Province increased by 18.2 billion yuan (US$2.97 billion). By the first half of 2013, the total bad loans belonging to the steel trading market in Jiangsu Province were 21.3 billion yuan (US.3.48 billion), among which, the nonperforming loan (NPL) ratio was 42.3 percent, 23.3 percent higher than it was at the beginning of this year. It is expected that the number of new bad loans will continue to increase.
To effectively resolve the steel trade market’s credit risk, the Jiangsu government recently proposed to repackage bad loans for State-owned enterprises to take over. Some financial professionals have concerns that such repackaging process may change these debts in the financial markets into the taxpayers’ responsibility.
Source: 21cbh.com, August 21, 2013