Global watchdog warns China at growing risk of banking crisis

Three times above danger level

The banking industry's global watchdog has warned risks of a Chinese banking crisis are rising, with stress in the sector now far exceeding levels considered dangerous.

According to the BBC, the latest quarterly review from the Bank for International Settlements (BIS) revealed China's credit-to-GDP gap, a key gauge of stress in the banking sector, hit 30.1 in Q1 2016, more than three times above the danger level. The BIS considers a credit-to-GDP gap of 10 to be a sign of potential danger, and a year ago put China's figure at 25.4. The credit-to-GDP gap is calculated by measuring the divergence between a company's borrowing in relation to the size of its economy. Its warning comes just three months after the People's Bank of China, the country's c...