China Tells Banks to Provide $85 Billion in Property Funding
- Big lenders told to ramp up financing for the rest of the year
- Latest move to arrest housing slowdown that’s hurting economy
https://www.bloomberg.com/news/articles/2022-09-30/china-tells-big-banks-to-provide-85-billion-in-property-funding
Bloomberg News
30 September 2022, 7:28 pm AEST
Updated on30 September 2022, 8:11 pm AEST
China’s financial regulators told the nation’s biggest state-owned banks to extend at least 600 billion yuan ($85 billion) of net financing to the embattled property sector in the final four months of this year, according to people familiar with the matter, in their latest attempt to address a deepening liquidity crisis.
The People’s Bank of China and the China Banking and Insurance Regulatory Commission recently told the six largest banks including Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. to each offer at least 100 billion yuan of financing support in any form including mortgages, loans to developers and purchases of their bonds, said the people, asking not to be identified discussing a private matter.
The PBOC, CBIRC, ICBC and China Construction Bank didn’t immediately reply to requests for comment.
The call is the latest in a series of actions intended to arrest a property slump that’s been weighing on the world’s second-largest economy for more than a year. Chinese policymakers have already encouraged local governments to ease curbs on homebuying, asked lenders to meet the reasonable financing needs of developers, and set up a program to providespecial loansthrough policy banks to ensure projects are delivered.
Earlier Friday, the central government unveiled arare tax incentivefor homebuyers. People who purchase new residences within a year of selling old ones will get income tax refunds, according to a statement on the finance ministry’s website.
Some dollar bonds ofCountry Garden Holdings Co., the country’s largest builder, were on pace for their biggest gains since March as they climbed as much as 9 cents, according to prices compiled by Bloomberg.
Lending Slowdown
The lending target would be almost equivalent to the increase in property loans by the entire banking industry in the first half. Outstanding property loans rose 4.2% from a year earlier, theslowest paceon record, PBOC data show.
Despite regulators’pleas, banks have remained cautious about lending to cash-strapped developers, while demand for mortgages has sagged alongside homebuyer confidence.
Apart from traditional lending for mortgages and property projects, banks are also encouraged to buy bonds issued by developers and invest in the loan program for project delivery, the people said. That initiative currently targets 200 billion yuan in loans financed by policy lenders such as China Development Bank and Agricultural Development Bank of China, Bloomberg reported in August.
(20min delay)