China’s megabanks, led by the Industrial & Commercial Bank of China Ltd pledged financing support of at least 1.28 trillion yuan ($179 billion) to property developers as part of a push to ease the turmoil in the nation’s real estate market.
ICBC, the world’s largest bank by assets, said it would provide 655 billion yuan in credit lines to 12 developers, including Country Garden Holdings Co. Bank of China Ltd., Bank of Communications Co., Postal Savings Bank of China Ltd. and Agricultural Bank of China Ltd. and China Construction Bank Corp. also disclosed they would extend financing.
The barrage of bank financing wasn’t extended to China Evergrande Group, the country’s most-indebted developer that in large part kicked off the current turmoil, as well as Sunac China Holdings Ltd. Chinese property firms rallied more than 7% and extended gains, according to the stock index of developers.
The moves came after regulators issued a 16-point plan earlier this month to financial firms for boosting the real estate market, with measures that range from addressing developers’ liquidity crisis to loosening down-payment requirements for homebuyers.
The big state-owned banks have since set up special mechanisms to ensure quick implementation of the measures, and created whitelists for qualified regional developers to extend the maturities of their existing development loans, according to a representative of the China Banking and Insurance Regulatory Commission.
The big banks will also expand financing services to support acquisitions of high-risk projects by key developers, the representative said without naming any companies. Some joint-stock banks have allowed mortgage borrowers to delay repayments without reclassifying their loans, the person added.
China Construction Bank has also set up a 30-billion-yuan fund to buy properties from developers. The lender has made progress on more than 20 projects, with their combined assets exceeding 10 billion yuan, the CBIRC representative said.
China’s banks have been told to provide at least 1 trillion yuan in funding in the final months of 2022 to the battered property sector to avoid a broader fallout on the economy that is also weighed down by Covid lockdowns. The industry has issued 2.64 trillion yuan worth of loans to developers and 4.84 trillion yuan of mortgages in the first 10 months this year, the CBIRC representative said.
