Asset-backed securities sales surge as lenders see deposits fall

Chinese banks are selling asset-backed securities at a rapid pace as they seek to offset a slump in deposits, prompting analysts to warn of the risks of these instruments, which sparked the global financial crisis.

Lenders in the world's second-biggest economy have issued 148.7 billion yuan ($24.2 billion) in collateralized debt obligations this year, Bloomberg data showed. The central bank and the finance regulator both must approve such issues, which take assets off balance sheets for accounting purposes, allowing lenders to seek more business without breaching regulatory limits.

China is experimenting with new types of securities at a time when deposits are dropping at a record pace and soured debt is rising amid a property slump. Nonperforming loans rose to the highest in five years in June as China Construction Bank Corp and Bank of China Ltd reported sluggish profit growth.