July 27, 2010 (Chinavestor) Bank of New York Mellon (NYSE:BK), the world's largest custodian bank, made positive remarks about Chinese banks, noting that the country's banks are "well capitalized" and that steps taken by China's banks to raise additional capital are "important." China's banks are looking to boost capital reserves after boosting lending as part of the country's 2009 stimulus plan.
A gauge of the nation’s lenders dropped for a second day on concerns Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan they’ve lent to finance local infrastructure projects, according to Bloomberg News. Credit agencies expect some defaults on these loans, but not to a degree where systemic risk becomes an issue.
Bank of New York Mellon (NYSE:BK) expects to have its China fund management venture set up by the end of this year. The bank is seeking approval from Chinese regulators to invest in local Chinese stocks and bonds on behalf of foreign investors. BNY Mellon’s (NYSE:BK) asset management arm received approval in November under China’s qualified foreign institutional investor, or QFII, program, according to Bloomberg.
China's banks have restricted lending this year on concerns last year's stimulus loans have not gone toward worthwhile projects. Rising property prices have also played a role in Chinese lenders scaling back loans.