Chi­nese banks to cur­tail bill fi­nanc­ing to pre­vent risks

The Pak Banker - - FRONT PAGE -

Some Chi­nese banks have tight­ened risk man­age­ment of short-term lend­ing known as bill fi­nanc­ing amid in­creased reg­u­la­tory scru­tiny, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter. An In­dus­trial & Com­mer­cial Bank of China Ltd. branch has sus­pended such lend­ing for iron ore, steel trad­ing and coal trad­ing com­pa­nies, and lim­ited trans­ac­tions to se­lect banks, one of the peo­ple said, de­clin­ing to be iden­ti­fied as he isn't au­tho­rized to speak with me­dia. A joint-stock bank has also tem­po­rar­ily halted bill fi­nanc­ing, which many smaller firms rely on to pay op­er­at­ing costs, a se­cond per­son said. The funds usu­ally must be re­paid within sev­eral months.

The China Bank­ing Reg­u­la­tory Com­mis­sion is­sued a no­tice ear­lier this month ask­ing banks to re­view bill-fi­nanc­ing busi­nesses for vi­o­la­tions and risks, two peo­ple fa­mil­iar with the mat­ter said.

That adds to pres­sure on liq­uid­ity in the fi­nan­cial sys­tem be­fore Lu­nar New Year hol­i­days next month. While bor­row­ing costs in China re­main near decade lows, yields in the bond mar­ket have jumped this week as cap­i­tal out­flows amid the yuan's tum­ble crimp cash.

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