Chongqing bank defends loans to local authorities
The mainland city lender says 20.1 billion yuan government loans present no risk to balance sheet, citing stringent regulatory controls
Bank of Chongqing, the mainland's first city commercial lender to seek a Hong Kong stock market listing, says the 20.1 billion yuan (HK$25.5 billion) it lent to the local government does not pose a threat to its balance sheet.
In an interview with the South China Morning Post, bank chairman Gan Weimin said the mainland banking regulators were well aware of the lessons of the euro-zone debt crisis and the loans did not pose a threat to its financial stability because of stringent regulatory controls.
The bank is a regional lender partly owned by Hong Kong-listed Dah Sing Banking.
[Chongqing’s] debt to GDP ratio is a long way from the dangerous level
Bank of Chongqing's lending to local government financing platforms represented about 24 per cent of its entire loan book in June.
The China Banking Regulatory Commission has highlighted such lending as "an emerging risk to the banking system".
Gan reaffirmed that the lender had not incurred any overdue loans with the local government, but he declined to comment on whether it had extended the maturity of government debt. He also did not provide background details on pending litigation in relation to three impaired loans with a combined claim value of 230 million yuan.
The National Audit Office began investigating local government debt levels in July, after the borrowings almost doubled since 2010. The findings of the investigation are expected to be unveiled before the third plenum of the Communist Party's Central Committee on Saturday.