Banking

Agricultural Bank stops lending to developers

(Agencies)
Updated: 2010-08-26 17:41

Agricultural Bank of China Ltd has frozen lending to property developers as it reviews outstanding loans to the industry, Bloomberg reported Wednesday, citing two people with knowledge of the matter.

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The bank's loans to property developers increased almost 28 percent in the first half of this year, the sources, who wanted to remain anonymous, said, adding that the bank issued the order to branches nationwide on Aug 23 and will restart loans at the end of this month after the review is completed.

Chinese banks are tightening loans to the real estate industry after the government began a clampdown on property speculation in April.

Agricultural Bank has just completed the world's largest initial public offering this month, raising $22.1 billion. It had 432 billion yuan ($63.5 billion) in outstanding loans to property developers as of Dec 31, accounting for 14.4 percent of all corporate loans.

The banking regulator didn't give a definite answer whether it issued the freeze order, according to a National Business Daily report.

Spokesmen from Industrial and Commercial Bank of China and Bank of China told reporters they knew nothing about such an order.

Banking analyst Wu Yonggan, of Guoatai Junan Securities, told National Business Daily that if other banks follow suit in the coming days, then the move might be on regulator's orders.

In the first half of this year Chinese banks advanced 1.38 trillion yuan in new loans to property developers and home buyers, down 26 percent year-on-year, the central bank said in its quarterly monetary report published on Aug 5.