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Lenders in Tianjin cut back on EU exposure

By Wang Xiaotian (China Daily)

14:04, February 08, 2012

Economists say likelihood of Greece exiting eurozone has increased

BEIJING - Chinese banks and companies in the northern city of Tianjin have cut exposure to Europe in a move to reduce their risks amid the spreading eurozone debt crisis, a newspaper run by the Chinese central bank has reported.

Europe is Tianjin's second-largest export destination after the United States.

A survey of 53 banks and 15 companies conducted by the local foreign-exchange regulator found that 11 banks had tightened the reins on Europe-related business, the Beijing-based Financial News reported on Tuesday.

The banks had reduced lending to foreign, especially European, lenders, cut or halted trade finance for European countries with high debt risks and suspended derivatives business with European banks, the report by the People's Bank of China-run newspaper said.

In addition, the banks were being choosier about their clients and reminding them of risks related to their foreign trading partners.

Banks also reported cutting issues of euro-denominated wealth-management products, after the weakening euro hurt earnings last year.

However, Chinese banks generally believed they had only limited exposure to the eurozone debt crisis, because their holdings of euro bonds were very low, and their limited euro-denominated assets mainly represented loans to finance trade, which would be little affected by further euro depreciation.

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