September 8, 2011 / 3:48 AM / 6 years ago

China faces downgrade if bank asset quality worsens: Fitch

TAIPEI (Reuters) - China’s local currency debt rating could face a downgrade over the next 12 to 24 months if an expected deterioration in asset quality materializes, according to ratings agency Fitch.

Fitch put its China local currency debt AA minus rating on negative outlook in April, citing concern over financial stability after a lending surge.

“We expect a material deterioration in bank asset quality,” Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch, told Reuters in an interview. “If the problems in the banking system pan out as we expect or are even worse over the next 12 to 24 months, then that would incline us to take the rating downwards.”

Reporting by Jonathan Standing; Editing by Chris Lewis

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