China's banking sector is facing a full-scale crisis. In just one week, 40 banks disappeared, absorbed into larger institutions.
Today, Jiangxi Bank of China went under, further escalating the crisis.
China's smaller banks are struggling with bad loans and exposure to the ongoing property crisis.
Scope of the Problem
Some 3,800 such troubled institutions exist. They have 55 trillion yuan ($7.5 trillion) in assets—13% of the total banking system—and have long been mismanaged, accruing vast amounts of bad loans. Many have lent to real estate developers and local governments, gaining exposure to China's property crisis. In recent years, some have revealed that 40% of their books are made up of non-performing
loans
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