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Banks told to step up loan controls
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08:31, February 29, 2008

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The banking regulator yesterday warned big lenders of the risks of lending to real estate developers and highly polluting or energy-intensive firms, ordering them to step up controls to prevent a rebound in bad loans.

Despite a drop in their non-performing loan ratio in 2007, banks should not be complacent because they face stiff challenges ahead, Jiang Dingzhi, vice-chairman of the the China Banking Regulatory Commission, told executives from the big lenders.

"Banks should carefully implement the government's macro control policies and effectively prevent various dangers," he said.

As well as singling out property developers and industries that consume a lot of energy and cause pollution, Jiang told banks to keep a close eye on manufacturers with obsolete plants and firms whose loans are guaranteed by local governments.

Highlighting the risks of real estate lending, figures from the Shanghai banking regulator show 2 billion yuan in property loans went sour in 2007, twice as much as in 2006.

More than one quarter of the new loans extended by domestic banks in Shanghai last year went to real estate, and by the end of 2007 the sector accounted for about 32 percent of their outstanding loans, the 21st Century Herald reported.

Source:China Daily/Agencies

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