Banking giant to pull back on loans for 'overheated' industries

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Last updated at: (Beijing Time) Wednesday, February 11, 2004

Banking giant to pull back on loans for 'overheated' industries

China's largest commercial bank will reduce loans this year for a host of industries said to be overheated by some economists, which include iron and steel, electrolytic aluminum and cement.

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China's largest commercial bank will reduce loans this year for a host of industries said to be overheated by some economists, which include iron and steel, electrolytic aluminum and cement.

President Jiang Jianqing of the Industrial and Commercial Bank of China (ICBC) said Wednesday that the bank plans to grant 350 billion yuan (42.17 billion US dollars) of new loans in 2004, morethan 40 billion yuan (4.82 billion dollars) less than the 2003 figure.

"We will follow more closely and mitigate risks emerging from credit and loans for real estate and auto consumption," he told anannual work meeting of the ICBC.

"Loans should be resolutely stopped or withdrawn for blind investment, duplicated construction and projects not in line with the nation's industrial policies and market access conditions," henoted.

The ICBC posted a minor 1.5 percent non-performing ratio for money loaned between 1999 and the end of last year thanks to the efficient amelioration of the credit and loan structure that touched industries, places, customers and loan varieties.

Jiang said the proportion would be kept within two percent thisyear.

In 1999, China set up four asset management companies correspondingly to dispose non-performing loans of its four state-owned commercial banks -- the ICBC, the Bank of China, the China Construction Bank and the Agricultural Bank of China.

The so-called "big four" banks had lent too much to money-losing enterprises over the past decades, anaylysts say.

In 2003, some economists and officials claimed repeatedly that some industries such as real estate and cars were developing too rapidly -- partly propped up by excessive bank loans.

The China Banking Regulatory Commission (CBRC) said Sunday thatit would soon send teams to investigate money loaned by the State Development Bank, the "big four" including the ICBC and 11 joint-stock commercial banks, as well as rural credit cooperatives at county level, especially lending to those "overheated" sectors.

The investigation will also cover the financial institutions' support for the development of agriculture, small and medium-sizedenterprises, consumption and job creation, and the tightening of internal controls to prevent more non-performing loans, as required by the CBRC to support the nation's economic expansion and sharpen their competitiveness.

A CBRC spokesman said local banking regulatory bureaus and banks should treat the investigation with "great importance" and the investigating staff should behave in a "clean and self-disciplined" manner. The campaign should be completed by the end of April.

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