Chinese regulators tighten lending to property developers via trust company loans
The China Banking Regulatory Commission has stepped up inspections of trust companies in an apparent move to tighten lending to home builders
Mainland regulators are tightening one of the last funding channels available to home builders under the nation’s shadow banking system, stepping up scrutiny on trust companies in an effort to curtail lending to the overheated real estate sector.
The China Banking Regulatory Commission (CBRC) will scrutinise violations in real-estate financing at trust companies, the China Securities Journal reported on May 23.
Citing a leaked document, the report said that officials will check whether trust companies are helping developers to circumvent CBRC-imposed leverage caps by offering additional debt or equity financing to developers.
On May 24 the CBRC issued a statement saying that it had given a special check list for its on-site inspectors but no formal policy document had been released. The CBRC routinely dispatch staff to financial institutions to check their compliance, and an ad hoc check list is used to guide their inspection priorities.
Industry insiders said the check list illustrated concerns that developers were using borrowed money to acquire land.
