Banks halt new credit to property developers

08:51, November 15, 2010      

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China's four biggest State banks have used up their full-year credit quotas for property developers and will stop extending new loans to them for the rest of the year, an official newspaper reported Sunday.

China Real Estate Business, run under the Ministry of Housing and Urban-rural Development, said the four banks had halted approval of new loans since the end of October. It quoted several unnamed executives from the lenders.

"It is impossible to extend fresh loans to developers," said a credit department's executive at the Industrial and Commercial Bank of China (ICBC), according to the newspaper.

"What's worse, there is also limited scope to replace some of the existing loans with property loans."

He said banks infringing the bar would risk verbal warnings of further penalty measures from regulators as the government was on course towards normalizing credit from last year's lending spree.

"So basically, we can say property loans have been stopped this year," the executive told the newspaper.

Chinese banks typically frontload a large part of their loan quotas in the first quarters of the year to reap more gains from interest.

The Industrial and Commercial Bank of China official also estimated that the total credit available to property developers in 2011 would likely be reduced by 20 percent from this year due to the government's tougher measures to rein in inflation.

Beijing has launched measures to tame the property market since April, including raising down payments and mortgage rates and tightening control in financing and lending to developers.

Property inflation slowed a bit in October, after the government took fresh steps to reinforce curbs on speculation.

China's four biggest State banks are Industrial and Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China.

Source: Global Times

(Editor:黄蓓蓓)

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