CBRC tells banks to pro­tect de­pos­i­tors

China Daily (Hong Kong) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

China is urg­ing bank­ing reg­u­la­tors at var­i­ous lev­els to make banks strengthen their man­age­ment of cred­i­tors’ rights in or­der to stop steel and coal com­pa­nies from dodg­ing pay­ment of debts.

Dur­ing the process of ca­pac­ity re­duc­tion in the steel and coal in­dus­tries, some com­pa­nies are us­ing the op­por­tu­nity to dodge debts through bank­ruptcy or by sell­ing or trans­fer­ring as­sets, said the China Bank­ing Reg­u­la­tory Com­mis­sion in a guide­line pub­lished on its web­site on Fri­day.

The CBRC, along with the Na­tional Devel­op­ment and Re­form Com­mis­sion and the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy, said banks should stop pro­vid­ing lend­ing and set­tle­ment ser­vices to those com­pa­nies that refuse to cor­rect their be­hav­ior. Banks should post in­for­ma­tion about de­faults by these com­pa­nies on the na­tional credit in­for­ma­tion shar­ing plat­form, so that all banks can carry out pun­ish­ment jointly.

The na­tional bank­ing reg­u­la­tor also for­bade bank­ing in­sti­tu­tions from of­fer­ing loans to new steel and coal projects that vi­o­late government rules or to com­pa­nies that are in­creas­ing their ca­pac­ity against reg­u­la­tions.

For those com­pa­nies that meet China’s in­dus­trial poli­cies, al­ready have started to re­duce ca­pac­ity and are re­struc­tur­ing their busi­ness, banks should form cred­i­tors’ com­mit­tees — tem­po­rary or­ga­ni­za­tions set up by at least three banks that are cred­i­tors of a com­pany hav­ing dif­fi­culty in re­pay­ing a large amount of debt, the CBRC said. These com­mit­tees will im­ple­ment debt re­struc­tur­ing by ad­just­ing loan ma­tu­rity, lend­ing rates and re­pay­ment meth­ods for the com­pany.

“Banks will con­tinue to sup­port ra­tio­nal credit de­mands from high-qual­ity coal en­ter­prises rather than re­call­ing loans in ad­vance and stop­ping lend­ing to them,” said Zhang An­shun, di­rec­tor of the CBRC Shanxi Of­fice.

The reg­u­la­tor en­cour­aged banks to of­fer syndicated loans to qual­i­fied steel and coal com­pa­nies for merg­ers and ac­qui­si­tions.

Wu Qing, di­rec­tor of the com­pre­hen­sive re­search of­fice of the Re­search In­sti­tute of Finance at the Devel­op­ment Re­search Cen­ter of the State Coun­cil, said: “Pol­i­cy­mak­ers should find so­lu­tions for cut­throat com­pe­ti­tion trig­gered by ex­cess ca­pac­ity in the steel and coal in­dus­tries by im­pos­ing con­trol of prices and ca­pac­ity uti­liza­tion and en­cour­ag­ing merg­ers and ac­qui­si­tions that en­hance mar­ket com­pet­i­tive­ness.

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