The lines of new credit that the large Chinese state banks will offer to various companies in the country’s battered real estate sector already amount to about 1.28 trillion yuan (178,000 million dollars, 170,950 million euros), reports today the official economic newspaper Securities Times.
The banks have published multiple announcements since Wednesday, just days after the government released a plan with 16 measures to support the battered real estate sector and the central bank and the banking regulator held a symposium with the country’s main entities in the financing mechanisms for promoters were discussed.
Among the most recent, the Industrial and Commercial Bank of China (ICBC), the country’s largest bank, stands out, which will open lines of credit for a combined amount of 655,000 million yuan (91,450 million dollars, 87,830 million euros) to 12 developers, including the two largest in the country by sales volume, Country Garden and Vanke.
These two firms will also receive loans from other entities, as well as other prominent real estate companies such as China Overseas, China Resources Land, Longfor Group, Gemdale, Poly Real Estate or Midea Real Estate.
“The companies covered are mostly quality companies whose business is relatively cautious. Some other companies will also get more support in the rest of this month and in December,” said Yan, an analyst at property consultancy E-House China. Yuejin, quoted by the Hong Kong newspaper South China Morning Post.
At the moment, of the six large state banks in the Asian country, only two -Agricultural Bank of China and China Construction Bank- have not specified the amounts that they will make available to real estate companies.
The real estate sector has been in serious financial trouble after, in 2020, Beijing announced restrictions to try to prevent an increase in the debt of developers, which had experienced strong growth for years through aggressive leverage and sales policies on flat.
The best-known case at the international level is that of Evergrande, which, in the middle of last year, accumulated liabilities of more than 300,000 million dollars and which was intervened by the authorities after it incurred in non-payment of its obligations.
The lack of liquidity in the sector has caused many developments throughout the country to be forced to stop construction, which this summer resulted in a “mortgage boycott” that spread to more than a hundred cities, with the buyers of the unfinished flats informing the banks that they would not continue paying their loans.
In recent months, Beijing has announced other measures to try to alleviate the real estate crisis, such as the opening of special lines of credit or the request to the country’s large state banks to grant additional financing worth one billion yuan (about 140,107 million dollars or 134,246 million euros) to the sector during the last months of the year.
In fact, coinciding with the disclosure of the new lines of credit, the banking regulator announced yesterday that Chinese banks lent some 2.64 billion yuan (368,643 million dollars, 354,034 million euros) to the country’s promoters between January and october.