The directive underscores growing concerns among regulators about potential shocks to the banking sector
[BEIJING] China’s top financial regulator asked its policy banks and other major lenders to report their lending exposure to Venezuela after the US ousted the South American country’s Beijing-friendly leader, according to people familiar with the matter.
The National Financial Regulatory Administration (NFRA) also urged banks to strengthen risk monitoring of all Venezuela-related credit, seeking to assess potential dangers to China’s lenders, said the people, who asked not to be identified because the talks are private.
The directive underscores growing concerns among regulators about potential shocks to the banking sector as geopolitical risks intensify.
Venezuela has long been an important partner for China in energy and infrastructure projects, with billions in loans extended over the past decade, primarily led by policy banks such as China Development Bank.
“If the US gets its way and US creditors and claimants become the senior creditors of Venezuelan debt, Chinese creditors would face higher risks of missed payments as the Venezuelan government and state firms struggle to meet US demands and domestic expenditure needs,” said Victor Shih, a professor at the University of California, San Diego.
The NFRA did not immediately reply to a request for comment.
China became a key lender to Venezuela in 2007, when it first provided funds for infrastructure and oil projects under late President Hugo Chávez. Public data supports estimates that Beijing lent upwards of US$60 billion in oil-backed loans through state-run banks until 2015.
Alicia Garcia Herrero, chief APAC Economist at Natixis, said on Bloomberg Television that the number is likely lower now as China has added more equity in the nation.
China’s Foreign Ministry expressed “deep shock and strong condemnation” of Washington’s move, denouncing it as a serious violation of international law, the purposes and principles of the UN Charter, and basic norms governing international relations. The ministry specifically called for the immediate release of President Nicolás Maduro and his wife, who were captured in a raid.
President Donald Trump said the US needs “total access” to Venezuela as questions mount about the country’s leadership following the capture. BLOOMBERG
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