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Banks must review loans to curb speculation
By Winny Wang |
April 21, 2010, Wednesday
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Online Edition
Online Edition
CHINA'S banking regulator urged larger lenders to conduct quarterly stress tests on property loans as part of its efforts to clamp down on bad loans and control speculative investments.
Financial institutions must follow the central government's property controls and mortgage loan policies to strictly rein housing speculation, said Liu Mingkang, director of the China Banking Regulatory Commission, in a statement on its Website yesterday.
Banks must reassess lending to local government companies on a "project-by-project" basis and return to each "loan package" to reassess the risks, Liu said. The lenders should also set aside sufficient provisions for loans by the end of the third quarter, he said.
China's State Council has implemented stricter measures to control soaring housing prices after costs in 70 major Chinese cities jumped a record 11.7 percent in March from a year earlier.
The government raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent and reiterated that buyers must pay an extra 10 percent on interest rates for these homes.
Financial institutions must follow the central government's property controls and mortgage loan policies to strictly rein housing speculation, said Liu Mingkang, director of the China Banking Regulatory Commission, in a statement on its Website yesterday.
Banks must reassess lending to local government companies on a "project-by-project" basis and return to each "loan package" to reassess the risks, Liu said. The lenders should also set aside sufficient provisions for loans by the end of the third quarter, he said.
China's State Council has implemented stricter measures to control soaring housing prices after costs in 70 major Chinese cities jumped a record 11.7 percent in March from a year earlier.
The government raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent and reiterated that buyers must pay an extra 10 percent on interest rates for these homes.
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