Chinese banks stake their future on SME loans

Chinese banks are moving to address profitability issues raised by tough new lending rules and capital regulation by bolstering lending activity to small-to- medium sized enterprises. But there are concerns mainland banks may not have sufficient requisite skills to support such a rapid credit expansion into this sector. Georgina Lee reports

A credit revolution is taking place in mainland China. Large banks, which traditionally have catered to the needs of state-owned enterprises (SOEs) and increased their lending to government and quasi-government entities by trillions of yuan in 2009, have virtually frozen credit growth to this segment of business. Instead, major banks are opening up their balance sheets to small-to-medium sized