Why Chinese banks are now vanishing

The savings and loan (S&L) crisis terrorised America’s banks for years. Starting in the mid-1980s, a mix of aggressive lending growth, poor risk controls and a property downturn contributed to the collapse or consolidation of over 1,000 small lending institutions. China’s smallest banks are now suffering from many of the same ailments. But until recently few have collapsed or merged with others.

That is starting to change. In the week ending June 24th, 40 Chinese banks vanished as they were absorbed into bigger ones. Not even at the height of the S&L crisis did lenders disappear at such a clip.