Fitch affirms Chinese banks

Fitch Ratings said it affirmed the long-term foreign-currency issuer default ratings of China's large state-owned commercial banks and policy banks with stable outlooks reflecting the expectations of continued high central government support to the banks in the event of stress.

Industrial & Commercial Bank of China, Bank of China and China Construction Bank have A long-term foreign-currency issuer default ratings. China Construction Bank, Bank of China, Agricultural Development Bank of China, China Development Bank and Export-Import Bank of China have F1 short-term issuer default ratings.

China Development Bank, Agricultural Development Bank and Export-Import Bank have A+ long-term foreign-currency issuer default rating. Bank of Communications has an A- long-term foreign-currency issuer default rating and F2 short-term issuer default rating.

China's policy banks' issuer default ratings are equated to that of China's sovereign (A+/stable) as they are 100% state-owned and play a crucial role in national economic development, the agency said.

China's state-owned commercial banks possess less government ownership than their policy bank peers but are considered to be of very high systemic importance given their large 49% share of domestic banking sector assets, the agency said. Their ratings continue to be closely linked to China's sovereign ratings at one to two notches below.

Reflecting the rapid growth of formal and informal channels of credit since 2008, Fitch said it is increasingly concerned about a medium-term deterioration in asset quality across China's banking sector, which would impact both commercial and policy banks.

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