Accounting shake-up set to hit China shadow banking

Banks brace for extra provisions under IFRS 9 for loans masquerading as investment products

Accounting

A switch by China’s banks to new accounting standards, if adopted in full, may lead to a reclassification of indirect forms of lending and an increase in the provisions held against this activity. Observers say the move could help wean the country off its reliance on a bloated shadow banking sector.

The rules, known as IFRS 9, are predicted to aid China’s financial authorities in their bid to clean up the balance sheets of banks that have exploited these alternative lending channels to swerve

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