24 Jun 2011

Warning from Fitch on Chinese banks

8:23 pm on 24 June 2011

Ratings agency Fitch has warned that China's banking system could be at risk of a Lehman-style collapse because of undisclosed loans.

Fitch, which is dual-headquartered in New York and London, believes China's banks have been making hidden or off balance sheet loans.

The agency's Charlene Chu says it means investors are left in the dark about the bank's outgoing obligations.

"There is also a belief among a lot of the investors in China that the risk remains with the banks and therefore if the product goes bad the banks will step in and cover it. If you talk to the banks, they have the exact opposite view of that."