Asia Pacific

Smaller Chinese banks have ramped up their shadow lending activity, adding to the financial risks that threaten to trip up the world’s second-biggest economy. The 2013 results of unlisted banks, published over the past week, reveal that city-based lenders have been among the most aggressive in China in using complex credit structures to evade regulatory controls and issue higher-yielding loans. These shadow loans have been profitable for banks so long as growth has been strong.

Australia risks unleashing a debt crisis similar to Europe's unless the government reins in spending and considers privatizing some state assets, according to an advisory body charged with assessing the nation's finances, The Wall Street Journal reported. The National Commission of Audit said the government needed to make the changes to shield the world's 12th-largest economy from the sorts of sovereign-debt problems that certain European nations such as Greece and Spain have recently faced.

Loans between companies is the fastest-growing category of shadow banking in China, but with next to no data on where such loans are going, their effect on the economy is a black box, The Wall Street Journal China Real Time blog reported. But two academic papers published over the last year on such lending – known as entrusted loans – offer a rare glimpse into how these loans work. The findings? Entrusted loans may have become the single most important factor keeping China’s property developers afloat.

A company developing one of New Zealand's biggest, most intensive affordable housing estates has been put in receivership. More than 420 apartments and townhouses are planned for the Springpark estate on a 10.5ha site in Auckland's Mt Wellington and the first stage of the development is expected to be completed next year, The New Zealand Herald reported. Springpark is seen as an affordable homes project, with townhouses in stage one priced from $399,000 to $554,000. Most of stage one has already sold.

U.S. and Canadian customers of failed Tokyo-based bitcoin exchange Mt. Gox have agreed to settle their proposed class action lawsuits that alleged the company defrauded them of hundreds of millions of dollars, Reuters reported. The class action plaintiffs agreed to support a plan by Sunlot Holdings to buy the shuttered exchange and accept their share of bitcoins still held by Mt. Gox, according to a statement and court filings. Mt.

Australia's Prime Minister Tony Abbott has gone from student boxing champion at Oxford University to a combative defender of conservative values during two decades in Parliament, The Wall Street Journal reported. Now, he is preparing for a federal budget on May 13 that represents one of the biggest battles of his leadership yet. In his sights are generous government welfare programs for Australians, which the ruling Liberal Party argues are increasingly unaffordable as the boost to Treasury coffers from a decadelong mining boom fades. Mr.

A network of loan guarantees set up to improve companies' access to credit in one of China's richest districts is creating new risks of default as some debts sour, another sign of how private firms are bearing the brunt of an economic slowdown, Reuters reported. Chinese media have reported on a credit crunch developing among steel and textile manufacturers in Hangzhou city, 175 km (110 miles) south of Shanghai in Zhejiang province, as the failure of some to repay loans pushes their burden onto healthier firms.

Tokyo District Court ordered liquidation to begin at failed bitcoin exchange Mt. Gox, the company said on Thursday, after the bankruptcy administrator said on April 16 that it would be difficult to rehabilitate the firm, Reuters reported. Mt. Gox, once the largest bitcoin exchange in the world, filed for bankruptcy protection on February 28, saying that 750,000 of its customers' bitcoins had been taken from the exchange due to a security flaw in its code, as well as 100,000 belonging to the exchange. It also said that $27 million was missing from its bank accounts.

China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt, Bloomberg News reported. The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.

Chinese Premier Li Keqiang’s plan to introduce deposit insurance is meant to comfort the nation’s savers as bad loans mount. In the bond market, it’s fueling speculation he’s preparing to let some banks collapse, Bloomberg News reported. Authorities may tolerate failures of smaller banks once depositor safeguards are in place, Kwong Li, chief executive officer of China Lianhe Credit Rating Co. said.