SINGAPORE/HONG KONG, July 22: China Minsheng Bank fell more than 3 percent on Monday and the shares of most other smaller Chinese lenders weakened as investors worried about their ability to weather the impact of a lending rate change compared to their larger rivals.
A government decision on Friday gave commercial banks the freedom to compete for borrowers, a reform the People’s Bank of China said will help lower financial costs for companies. Previously, the lending floor was 70 percent of the benchmark lending rate.
‘The assumption in the short term is that the bigger banks can at least make up for the hit on their net interest margins from this move with greater loan demand as a result of lower lending rates,’ said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
At 0301 GMT, Industrial and Commercial Bank of China , China Construction Bank (CCB), Bank of China and Agricultural Bank of China (AgBank) pared early gains to edge down by as much as 0.7 percent.
China Minsheng Bank dived 3.3 percent, while Citic Bank shed 2.5 percent and China Merchant Bank slid 1.2 percent. The Hang Seng China H-Financials Index was down 0.5 percent.
The Hang Seng Index was flat and the China Enterprises Index of the top Chinese listings in Hong Kong was down 0.6 percent.
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