China’s banks face cash crunch fears after authorities seize lender

The PBOC and the China Banking and Insurance Regulatory Commission said they would take control of Baoshang Bank, an Inner Mongolia-based commercial lender with 291 branches, for a year from May 24. (The takeover) has led to concerns of potential liquidity risks in the market, particularly for small banks and non-banking financial institutions,” added Goldman Sachs analysts in a report on Tuesday. Non-bank financial institutions hold around 60% of medium-term notes — the most liquid and important corporate bonds — according to Goldman, and are also increasingly important investors in policy bank bonds, which are issued by the countries three policy banks: Agricultural Development Bank of China, China Development Bank, and Export-Import Bank of China.

Source: www.cnbc.com