Chinese banks have been investigating their exposure to the stock market from wealth management products and loans collateralized with stocks, the China Securities Journal reported on Thursday, citing unidentified bank officials.
The report did not identify any banks by name, but said that many banks had been ordered by their headquarters to conduct the checks.
One bank executive told the newspaper that the lender's headquarters had launched the investigation in late June.
Banks have been a major source of funding in the grey market of margin financing - a network that also includes trust companies, asset managers and loosely regulated grassroots finance firms.
While the business has generated profits for lenders, the stock market tumble since mid-June may have put their money at risk.
At a mid-sized commercial bank, for example, business related to the stock market totaled 151.8 billion yuan at the end of June. As of July 3, more than 500 of the lender's stock-related products had touched early warning lines, according to the newspaper.
Banks have also started collecting detailed information regarding loans collateralized with stocks, including the type of shares that are being used as collateral, the collateral ratio, and measures taken when prices of those stocks slump, the article said.
Bank and other loans backed by listed shares officially jumped around 260 percent in May to 58.4 billion yuan ($9.4 billion) from a year earlier, representing about 4.8 percent of total social financing for the period.
(Reporting by Samuel Shen and Pete Sweeney; Editing by Neil Fullick)
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