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Property loan curbs unlikely industry-wide
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The Industrial Bank’s move to suspend some types of financing to property developers is unlikely to become an industry-wide phenomena, analysts said yesterday.
The Fujian-based lender has halted mezzanine financing to property developers, which will allow the lender to impose equity interest on them if the loan is not paid back in time. In real estate finance, mezzanine loans are often used by developers to secure supplementary financing for development projects.
The bank has also suspended property-related supply chain financing which involves lending to steel and cement producers, according to an internal file of the bank which was circulated on the Internet over the weekend.
The bank started to cut its risk appetite during the second half of last year, as 34 percent of its total assets were loans to the property sector and local governments — the most among all the listed banks in China, according to China International Capital Corp.
But CICC said the bank hasn’t tightened credit policies for the entire property sector.
Rumors about other banks, including China Citic Bank, China Merchants Bank and the Agricultural Bank of China, having also received similar instructions to limit lending to property developers were false.
The Bank of Communications denied it received such instruction yesterday.
“The policy stance of other banks for the property-related business hasn’t changed from the second half of last year,” said Qiu Guanhua, a researcher at Guotai Junan Securities.
“The rumors are not true. It’s very unlikely other banks will rush to follow and suspend all types of loans to the entire property sector,” said Qiu.
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