Fitch downgrades six Chinese banks to A (from A+)
- Outlook Stable
The six banks are:
- China Development Bank (CDB),
- The Export-Import Bank of
China (ExIm), - Agricultural Development Bank of China (ADBC),
- Postal Savings
Bank of China Co., Ltd. (PSBC), - Standard Chartered Bank (China) Limited (SCBC)
- and United Overseas Bank (China) Limited (UOBC).
CDB, Exlm, and ADBC are ‘policy banks’ and their ratings are aligned with China’s sovereign rating. While Fitch says
- “the sovereign rating downgrade indicates
the government’s
reduced ability to provide the same level of extraordinary
support to the
banks”, - “Our expectation of a ‘Very Strong’ support
propensity from the
government for the three policy banks and PSBC remains
unchanged.”
—-
If you need ……..
In China, a “policy bank” refers to a state-owned financial institution that operates primarily to implement government policy rather than to pursue profit like a commercial bank. These banks are a key part of China’s financial system and are used to fund and support major national development objectives.
Key features of policy banks in China:
-
Government-backed and owned
They are fully owned by the central government and often enjoy implicit (or explicit) sovereign guarantees, meaning they can access capital at lower costs and take on more risk. -
Mandated missions
They serve specific strategic goals such as financing infrastructure, supporting export industries, or funding poverty alleviation and rural development—projects that might not attract private investment due to long horizons or low profitability. -
Not profit-driven
Unlike commercial banks, they’re not focused on maximizing returnsFitch downgrades six Chinese banks
