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BOC Takes the Lead in Launching Personal Stock Hypothecation Loan Business
The Guangdong Branch of the Bank of China (BOC) and Guangdong Securities Co., Ltd held a joint press conference in Guangzhou on November 10, announcing that the BOC Guangdong Branch have launched personal stock hypothecation loan business.
This is the first bank in China to launch the business. The credit receivers are temporarily restricted to the clients of the business offices of Guangdong Securities Co., Ltd in Guangzhou.
According to an official with the BOC Guangdong Branch, after the launch of the business, a credit receiver can apply to all the branches of the BOC in Guangzhou area for personal comprehensive loans and provide the securities trading account opened in his name with the securities business offices of Guangdong Securities as collateral for the loan. Guangdong Securities will be responsible for supervision of the accounts during the borrowing period.
To evade risks, BOC will not accept PT and ST shares as collateral. It also set a credit security line and a offsetting line, which are 150% and 130% of the credit amount, respectively. For example, if an investor wants to borrow RMB 500,000, he must provide at least RMB 750,000-worth of shares. If the value of shares dropped to RMB 650,000, BOC will close the position according to agreement.
After offering the credit, BOC and Guangdong Securities will jointly monitor the accounts and not allow buying in PT and ST shares on the account. Considering the business is completely new one, BOC temporarily set the starting-point amount for the credit at RMB 300,000. For the time being, it only provide credit to individual investors who have more than RMB 600,000 worth of shares. The longest term of the credit is 1 year, and the interest rate of the credit is the same as that offered by commercial banks, which is 5.85% for one-year -term credit.
The official said personal stock hypothecation loan is a breakthrough in the guarantee method for personal credit. It will be conducive to the development of personal credit granting business and the expansion of personal financing channel. Hence, BOC is very confident about the business. (Panorama)
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