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Banks tap syndicated loan business

BANKS in Shanghai are gearing up in offering syndicated loans in a bid to reduce risks, the local banking regulator said yesterday.

The outstanding value of syndicated loans in the city totaled 155 billion yuan (US$22.7 billion) by the end of last month, a rise of 15 billion yuan from the start of this year, said the Shanghai Bureau of the China Banking Regulatory Commission yesterday in a statement.

The outstanding value was up 25 percent, or 30.5 billion yuan, on a year-on-year comparison.

China's 4-trillion-yuan stimulus package generated several major infrastructure and investment projects and created the need for syndicated loans.

Banks in Shanghai have issued syndicated loans to industries such as transport, energy, chemicals, electronics and real estate. Banks in the city have set up teams for syndicated loans and established a regular communications mechanism among themselves to discuss possible projects.

The local banking regulator is pushing the growth of syndicated loans to trim a concentration of risks.

China has moved to an easing monetary policy since November, including lifting lending quotas, cutting interest rates and reserve requirements.

The top banking regulator has already asked banks to offer syndicated loans if a single client's total credit need is more than 15 percent of the bank's capital or if a single credit project is more than 10 percent of the bank's capital.

At the end of last year, the outstanding value of syndicated loans in China totaled 956 billion yuan, 2.98 percent of the total outstanding loans based on credit data. In some mature markets, syndicated loans account for 20 percent of their total loans.


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