There are a few points to note:
1) Impacts to large banks (i.e. the Big Four) are limited as they account for less than 5% of Evergrande’s total borrowing. They would be able to absorb the contagion effects.
2) City/ rural commercial banks are heavily loaded on their size but they are mostly unlisted and owned by local governments, which means the central government would have final obligation to inject capital if needed.
3) Non-bank financial institutions means insurance and trust companies. Insurance in China is oligopolized and are the most healthy and solvent form of financial institution in China and they are heavily regulated; trust is a big concern as they are insufficiently capitalized and they package debts in wealth management products. This is called shallow banking in China but the size has been shrunken massively in recent years. Due to a high saving rate of individuals, there are still strong demand for such products that usually provide mid-to-high teens returns. If defaulted this could be a big social problem (the main concern of the government), but for financial institutions the shock would be limited.
4) Apart from private bank clients, foreign bond funds were also active buyer of Evergrande’s offshore bonds. From Morning Star data, bond funds under BlackRock, HSBC and UBS were the major buyers. But those bonds only account for less than 2% of their respective fund size.
On more point to note, banks’ direct loan to property developers have been declining since 2019, thanks to the “Three Red Line” policies announced last year (but that also partly led to Evergrande’s debt crisis). Currently, from data on all listed banks, direct commercial loan to property sector accounted for only 6.2% of the total. Mortgage loan accounted for some 30%, but the equity ratio or downpayment ratio for that is very high, again very different from the US in 2008. At the end of 1H, NPL ratio of commercial banks in China stood at 1.76%, provision coverage ratio at 193.2%, and Core CAR at 10.5%, all has been on healthy trend in recent years.
Back then, Lehman’s debt or packaged debt covered properties, equities and its business was large across major financial market globally. Further, it was ill-capitalized with only 3-4% of its liabilities, and more are off balance sheet. Evergrande’s liabilities are visible on its statements, and institutional creditors are sufficiently aware of the risk, perhaps except individuals who bought the wealth management.