Break the bank

8 Jan 2021 By Yawen Chen Follow @ywchen1

Beijing has capped bank property loans as a percentage of total credit, a blunter, harsher approach than previous efforts. Indebted developers will suffer, as will lenders. It’s a sign of official confidence that the economic cost of restraining housing speculation is bearable.

This content is for Subscribers only

Context News

The People’s Bank of China issued a notice on Dec. 31 to require all banks to cap the ratio of their outstanding property loans as a proportion of total loans, and the ratio of outstanding mortgages to total loans.

The required ratios vary depending on each bank’s asset size and operations as the PBOC grouped them into five categories. For China’s big four banks, along with China Development Bank, Bank of Communications and Postal Savings Bank of China, the ratio of outstanding property loans to total loans will be capped at 40%, and outstanding mortgages as a proportion of total loans will be capped at 32.5%. For the smaller banks, the ratios will be lower.

Banks that do not meet the requirements will be granted a grace period of two to four years to rectify.

The new rules took effect on Jan. 1.

Context News

Banks that do not meet the requirements will be granted a grace period of two to four years to rectify.

The new rules took effect on Jan. 1.

Email a friend

Please complete the form below.

Required fields *