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Some Chinese banks ordered to issue more loans for real estate projects – sources

By on November 22, 2021 0

A man walks on scaffolding at the construction site of the Beijing Xishan Palace apartment complex developed by Kaisa Group Holdings Ltd in Beijing, China on November 5, 2021. REUTERS / Thomas Peter / File Photo

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BEIJING, Nov.22 (Reuters) – Some Chinese banks have been urged by financial regulators to extend more loans to real estate companies for project development, two banking sources with direct knowledge of the situation told Reuters on Monday, with the aim of ‘marginally ease tensions on liquidity across industry.

The Chinese authorities have yet to publicly give any sign that they will relax the “three red lines” – the financial requirements introduced by the central bank last year that developers must meet to obtain new bank loans.

But lenders recently adjusted their lending practices to reflect the latest central bank guidelines to “meet normal financing needs” for the sector. Read more

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The marginal easing of developer lending policies will still stick to the overarching tenet that “homes are for living, not for speculation,” the sources said, one from a commercial bank in the city. and the other from a large bank, which received the advice. regulators.

Financial regulators have asked banks to specifically speed up approval of loans for project development and ensure that outstanding loans for project development show positive growth in their loan portfolios in November compared to October. , the two sources said.

Both sources declined to be named due to the sensitivity of the matter.

The People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) did not immediately respond to requests for comment.

At the end of September, outstanding loans from banks for project development stood at 12.16 trillion yuan ($ 1.911 billion), up 0.02% from the previous year, according to data. of the central bank.

Quarterly growth for this type of loan slowed further from the second quarter by 2.8 percentage points, the data showed.

The Mainland China Blue Chip Index real estate sub-index (.CSI000952) jumped nearly 5% on Friday following market rumors of a possible easing of home loans.

The sub-index finished down 4% on Monday.

China will stand firm on policies to curb excessive borrowing by developers, even as it makes financial adjustments to help homebuyers and meet reasonable demand, bankers previously told Reuters. Read more

Some banks have accelerated the disbursement of approved home loans in some cities, bankers said. Read more

Last month, central bank official Zou Lan said there had been a “misunderstanding” among lenders about the PBOC’s debt control policies, causing financial strains for some developers.

Read more

“The banks should have supported the new projects in a reasonable way after (the developers) repaid the existing loans,” Zou said.

($ 1 = 6.3819 Chinese yuan)

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Reporting by Xiangming Hou, Kevin Huang and Ryan Woo; Writing by Cheng Leng; Additional reports by Jason Xue; Editing by Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.