China state banks pledge Us$38bil to builders

SHANGHAI: China’s mega state-owned banks are offering at least 270 billion yuan (Us$38bil or Rm173bil) in new credit to property developers as part of the nation’s push to ease turmoil in the real estate market.

Bank of China Ltd and Bank of Communications Co disclosed their agreements in statements, while Postal Savings Bank of China Ltd made the announcement yesterday.

Industrial & Commercial Bank Ltd said it expects to finalise a plan this week, while Agricultural Bank of China Ltd didn’t disclose the amount it will provide.

China Construction Bank Corp has also yet to announce its agreement, although the bank has set up a 30 billion yuan (Rm19bil) fund to buy properties from developers in September.

Chinese developers rallied yesterday as more signs of government policy support emerged for the debt-ravaged sector.

A Bloomberg Intelligence stock gauge of builders climbed as much as 5%, with CIFI Group Holdings Co and Longfor Group both surging over 10%.

Property firms’ dollar bonds also gained, with investment-grade Longfor rising as much as six US cents (27 sen).

China’s banks have been told to provide at least one trillion yuan (Rm640bil) in funding in the final months of 2022 to the battered property sector.

This is to avoid a broader fallout on the economy that is also weighed down by Covid lockdowns.

At a meeting with banks on Monday, the People’s Bank of China said it planned to provide 200 billion yuan (Rm127bil) in interest-free re-lending loans to commercial banks through the end of March 2023 to support them to provide matching funds for stalled property projects.

Earlier this month regulators issued a 16-point plan to financial firms for boosting the real estate market.