The Atlanta Journal-Constitution
Chinese banks try to calm fears about developer’s huge debts
Institutions try to assure investors they could handle default.
BEIJING — Trying to dispel investor fears, some Chinese banks are disclosing what they are owed by a real estate developer that is struggling under $310 billion in debt and say they can cope with a potential default.
The announcements came as Evergrande Group promised to talk with some individual investors in its debt. Other creditors waited to see whether Beijing will step in to oversee a restructuring to prevent financial disruption.
Evergrande’s struggle to meet government-imposed debt limits has prompted fears a default might disrupt the Chinese economy or global financial markets. Ratings agencies say a default is likely. Economists say Beijing can prevent a credit crunch in China but wants to avoid bailing out Evergrande while it tries to force companies to reduce debt levels.
One of Evergrande’s biggest lenders, Zheshang Bank Co., said it is owed $588 million and has “sufficient collateral.”
“The overall risk is controllable,” the bank said in a written answer to questions on a website run by the Shanghai Stock Exchange. It said a “risk situation ... will not have a significant impact” on the bank.
Others, including Shanghai Pudong Development Bank Ltd., gave no financial figures but said their lending was small, tied to individual projects and secured by claims to land. The Pudong bank said it was in “close communication” with Evergrande.
Changshu Rural Commercial Bank Co. in the eastern province of Jiangsu said it is owed 3.9 million yuan ($600,000).
The biggest state-owned commercial lenders including Industrial and Commercial Bank of China Ltd. didn’t respond to questions.
Evergrande was caught by stricter borrowing limits imposed on real estate last year by regulators who are trying to reduce surging debt levels the ruling Communist Party worries might drag on economic growth that already is in long-term decline.