China’s big banks hammered hard by credit crunch

June lending falls to US$44 billion.

Media report said banks slowed their pace of lending in the second half of June after a surge in lending in the first half and as a cash crunch limited their ability to issue new loans.

In the last week of June, banks reduced lending by about US$3.8 billion compared with the week earlier. The cash squeeze that began on June 21 sent the benchmark interbank lending rate rising to its highest level in nearly two years in late June.

China’s Big Four state-owned banks issued US$38 billion of new loans in the first three weeks of May. The amount of loans extended by the Big Four fell in April and May as China sought to control a surge in credit to lower the risk of financial failure.

Loans issued by the Big Four (Industrial & Commercial Bank of China Ltd., Bank of China Ltd., China Construction Bank Corporation and Agricultural Bank of China Ltd) typically account for 30% to 40% of the whole banking system's total loans.