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LENDING & CREDIT | Staff Reporter, China
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Why big Chinese banks might be 'secretly happy' with deleveraging

Higher borrowing costs seem to be a boon for them.

According to Bloomberg, as China ramps up its quest to conquer leverage, the banking sector is finding out that being a big fish pays -- literally.

While smaller lenders grapple with soaring money-market rates -- some are said to have defaulted amid the tight liquidity -- their larger counterparts are poised for a windfall. Bigger banks are benefiting from higher borrowing costs given their status as net lenders in the interbank market, a situation that has Citigroup Inc. to Morgan Stanley favoring their shares. Large bank stocks have already returned double that of their smaller brethren so far this year.

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