How should I understand the underlined? Why "that is a source of concern"?
Thanks in advance.
In contrast, smaller commercial banks have a much higher level of exposure. Bank of Nanjing and China Everbright Bank -- which in June delayed its Hong Kong IPO -- both have 20% of their loan book with local government financing vehicles. With the smaller banks' higher exposure only partially covered by higher capital, that is a source of concern.
That being said, my best guess is that the author means smaller banks are more vulnerable, because they haven't got much capital to face the risks.