OREANDA-NEWS. Fitch Ratings has published the first edition of a data file that tracks the Mainland China exposure (MCE) of banks in light of increasing attention on China risks. The spreadsheets track key data series on a global, Hong Kong system and individual bank level.

The data file is provided in Excel as a service to investors to enhance transparency and enable them to repackage the data as they see fit. Fitch included its most frequently used charts published in its previous research to allow for a quick overview of each spreadsheet.

The first issue of the data file opens with foreign banks' MCE. It captures annual data of 27 countries looking back to end-2009, including Hong Kong, Macau, Singapore and Taiwan. The second sheet includes a comprehensive overview of Hong Kong's gross MCE dating back to 2008. This is followed by a breakdown of Hong Kong banks' MCE by products, lenders and borrowers, which is derived from central bank disclosures and Fitch's addition of Hong Kong banks' claims on Mainland Chinese banks. This data has been available on a quarterly basis since end-2013.

Fitch also provides MCE data of 14 individual banks in Hong Kong back to end-2010 on a semi-annual basis. Finally, Fitch shares its view on the territory's exposure breakdown into domestic versus foreign claims. The agency has taken this approach as it believes that publicly available loans for use outside of Hong Kong are a weak proxy for foreign exposure.

We will continue to provide analytical coverage about banks' MCEs through various research formats, including special reports and dashboards. The MCE data file will be updated semi-annually, and we expect to incorporate more interactive functionalities in later versions.

Fitch has quantified credit-related activities in China through its measure of gross MCE since 2011. It relies on public disclosure following the Hong Kong Monetary Authority's (HKMA) classification for non-bank mainland China exposures (NBMCEs) and claims on Chinese banks and other financial institutions in line with Bank of International Settlements reporting. Combining the two data series results in an inflated number due to double-counting for non-bank financial institutions and not taking into account risk mitigation. Fitch is nevertheless comfortable using this measure as a starting point for its analysis, as there is limited historical data on collateral enforcement and loan recoveries across the legal systems in China and Hong Kong.