` China’s Bank lending halved in February from January amid worries over a `Near-Default’ on `Financial Product Structured’ by `Risky Trust’ Sector’

#AceFinanceNews says China’s bank lending halved in February from January, the government said Monday, amid worries over a near-default on a financial product structured by the risky trust sector.
Domestic banks extended 644.5 billion yuan ($105.0 billion) in new loans last month, up 24.5 billion yuan from the same month last year, the central bank said in a statement to AFP.

The February lending figure fell short of a median forecast of 740 billion yuan, according to a poll of economists by Dow Jones Newswires.New loans had reached a huge 1.3 trillion yuan in January, previous People’s Bank of China figures showed, with analysts attributing the spike to banks front-loading lending at the beginning of the year.

The central bank also said total social financing, a broader measure of credit, was 938.7 billion yuan in February, down 131.8 billion yuan from the same month last year.

“Much of the slowdown in broad credit was in trust loans, perhaps signalling that investors are becoming more wary following the highly-publicised near default in the sector at the end of January,” Capital Economics said in a report Monday.

Early this year, a $500 million investment product structured by China Credit Trust and sold by the nation’s largest bank ICBC avoided default after an unknown party made good on principal payments to hundreds of investors, though they did not receive pledged interest.

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Mysterious ICBC Banking

Technical disruptions at China’s largest state-owned lender caused temporary panic among customers at the weekend, with some expressing fears of a hacking or deliberately engineered credit squeeze.

Various banking services at ICBC – including internet, mobile and phone banking as well as automated teller machine services – were “paralysed” on Sunday morning for nearly one hour.

Unable to withdraw cash from ATMs or get through to the customer help hotline, some customers believed the outage was longer, but state broadcaster CCTV reported it was 45 minutes.

Cities said to be affected by the problems included Shanghai, Beijing, Wuhan, Chengdu and Xiamen, the Shanghai Daily newspaper reported.

The bank issued a statement via Sina Weibo on Sunday, reassuring customers that electronic channels were undergoing “system upgrades” since 10.38am and that certain services would be affected. The bank said it had restored all systems by 11.23am.

The glitch at the bank – one of China’s “big four” state lenders and largest in the world in terms of profit and market value – sparked concerns of a national credit crunch as it came just days after interbank lending rates had hit new record highs.

Others fanned worries that China’s financial system had been compromised by cyberattacks or hacking. The outage came just weeks after fugitive intelligence-leaker Edward Snowden told the South China Morning Post that the US National Security Agency had been hacking mainland Chinese and Hong Kong networks for years.

Online rumours circulating among financial insiders on forums such as Zhihu, China’s version of Quora, suggested that it was a deliberate show of force by the bank in response to Premier Li Keqiang’s bid to encourage private capital via “non-government affiliated banks” and a general overhaul of the financial system.

Courtesy of SCMP – More at:http://www.scmp.com/news/china/article/1267756/mysterious-icbc-banking-glitch-sparks-panic-frustration-among-customers

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