China state banks earmark over $11 billion for property projects

SHANGHAI – China’s state-owned lenders have earmarked at least 60 billion yuan (S$11.3 billion) of loans for property projects eligible for support, heeding Beijing’s call to boost lending to the beleaguered housing market.

Agricultural Bank of China approved more than 40 billion yuan of loans for real estate projects on white lists, the lender said in a statement on Feb 19.

China Construction Bank extended 3 billion yuan to five property projects, with more than 20 billion yuan of approved loans in the pipeline, it said late on Feb 16.

Local branches of Industrial and Commercial Bank of China and Bank of China also moved to offer financing support to some projects, according to statements over the weekend. They did not reveal the total amount of loans that had been extended or are being planned.

The announcements came after Beijing urged the local authorities in January to better support financing needs of developers and draft lists of eligible projects. Policymakers ordered banks to step up lending to the property sector, which saw credit growth in the last quarter slow to the weakest in more than a year, undermining the ability of developers to complete homes.

By establishing a “coordination mechanism,” central government officials asked major banks to approve a white list of property projects and requested the local authorities to ensure progress. A range of housing projects from cash-strapped developers including Country Garden Holdings and Sunac China Holdings have been put on the white lists, the companies have said.

The big four state lenders all vowed to actively meet “reasonable financing demand” of developers and eligible projects under the coordination mechanism.

The authorities are struggling to arrest a slowdown in China’s property market, which saw new home sales in January tumble 34.2 per cent from a year earlier.

Still, signs of improvements emerged during the week-long Chinese New Year holiday, with sales of existing homes in 50 key cities rising more than 70 per cent from a year earlier, according to Beike Research Institute.