China's history of preventing massive bank bad debts repeats

Shanghai, February 24 (Xinhua): China To prevent the history of massive bank bad debts repeat prepare to enter the marriage hall Chen Jun in the Nanjing Hexi Corridor fancy a house, but in the consultancy loan business he found that, although belonging to the first home purchase, but no bank is willing to give 70 percent interest rate concessions. The poor results of the stress tests on housing mortgage loans are important reasons why commercial banks are tightening their mortgages.　　The Shanghai Banking Regulatory Bureau's personal housing loan pressure test shows that, based on the September 30, 2009 data, in the case of a 10% decline in house prices, the bad rate is 2.6 times times the normal situation. Asset price bubbles, represented by real estate, are considered one of the biggest threats to China's credit security and even financial security.　　The rapid expansion of credit since last year has considerably increased the risk of bad loans to banks.　　Observers expect that the resurgence of the history of the massive bank bad loans will be one of the hot spots of concern at the annual meeting of China's National People's Congress, to be opened next week, and that the government's work report will make a clear and targeted deployment.　　Guo, director of the China Banking Research Center at the Central University of Finance and Economics, said the high risk of bad loans could be hidden by the rapid growth of real estate loans, the huge loans deposited by local financing platforms, and the flow of credit to "off the table" through cooperation with the Bank letter.　　China's central bank statistics show that 2009 the National Real Estate loan increase of more than 2 trillion yuan, accounting for 20.9% of the new loans, more than 3,800 local financing institutions, management of total assets of 8 trillion yuan, local government liabilities of 5 trillion yuan, the average debt rate of more than 60%. The debt level of China's local government financing platform is clearly at a dangerous position.　　A report by the Bank of Communications Finance Research Center shows that local governments often obtain credit from several banks through multiple financing platforms, forming a pattern of "long-term financing and long credit", and that banks sometimes struggle to grasp the overall liabilities and financial guarantee commitments of local governments, resulting in the chaos of debt management. Since China's rare proposal to implement a moderately loose monetary policy in response to the international financial crisis, the sound of banks ' bad debt risks has been ringing. China's new loans in 2009 amounted to a record 9.59 trillion trillion yuan, nearly twice times that of new loans in 2008.　　In the first month of this year, the size of new loans remained as high as 1.39 trillion yuan.　　Lu Commissar, chief economist at Societe Generale, said the days of credit, while stimulating China's vigorous economic recovery, have also buried some hidden dangers, especially as large amounts of bank funds enter industries and projects that have been "held up" and, once credit tightens in the future, the emergence of rotten-tailed projects and the rise in bad debts of banks are likely to be unavoidable. The head of a provincial-level branch of a state-owned commercial bank recently accepted a regulatory review of fixed asset loans. He said: "In the large number of credit opening, some of the bank funds in fixed assets investment, false trade contracts, such as the roundabout way into the stock market, not only blow up the asset bubble, increase the risk of inflation, but also buried the hidden danger of bad debts." "The Bank has beenStrict implementation of the relevant measures, "real credit" to ensure that loans into the real economy.　　"he said.　　Economists said that, while implementing a moderately loose monetary policy, the risk of bad debts could be effectively prevented by regulating the pace of bank lending through regulatory indicators such as capital adequacy ratios, reserve coverage, loan-to-deposit ratios and stress tests.　　China's two new regulations on credit regulation "Interim measures for the administration of liquidity loans" and "interim measures for the administration of personal loans" have recently been formally implemented, prohibiting the use of liquidity loans for fixed assets and equity investments, prohibiting excessive credit, vicious competition, and surprise lending.　　Analysts pointed out that, coupled with the previous release of the "interim measures for the management of fixed asset loans" and "Project financing business Guidelines", known as the "three methods a guideline" package of norms will become China's credit risk supervision system arrangements.　　China's Ministry of Finance is leading a document designed to regulate the financing platform for local governments to control the risk of bad loans in the bank, the Shanghai Securities Daily, the Xinhua news agency, reported. Shusong, deputy director of the Financial Research Institute of the Development Research Center of the State Council, said that local government financing was expected to shrink under the control of Governments and relevant regulatory authorities.　　In terms of new loan control, commercial banks may slow down credit approval for local financing platforms, and the risk control of local financing platforms will be enhanced in incremental lending. A few months ago, the CBRC demanded that the minimum capital adequacy ratio of large banks be raised from 8% to 11% and that small and medium-sized banks rise to 10% per cent, much higher than the Basel accord.　　At the same time, the bank's provisioning coverage is expected to increase from 130% to 150%. Wang, vice chairman of China's Banking Regulatory Commission, said: "In the period of credit expansion and better bank profitability, banks will be more secure and robust by requiring them to convert their profits into capital and reserve to withstand future potential risks, and to increase their ability to anticipate and not anticipate losses." Yan, director of the National CPPCC and Shanghai Banking Regulatory Bureau, said while maintaining a moderately easy monetary policy continuity and stability, we should also speed up the adjustment of credit structure, guide loans to more advanced manufacturing, modern services and small and medium-sized enterprises, and accelerate from the high risk of "two high" (high-energy, high pollution and overcapacity)　　Industry to quit. In the 90 's, the Chinese banks had swallowed up the bitter fruit of local governments and state-owned enterprises, and the extensive credit had left China's banking sector with a $23 trillion trillion in bad debts, and the government had to issue 270 billion special national debt to replenish its capital.　　and the establishment of four asset management companies stripped the major banks of the 1.4 trillion yuan non-performing assets, and the use of huge foreign exchange reserves to the four state-owned commercial banks injected capital. "It is clear that regulators are unwilling to see the results of a decade-old reform of China's banking sector again being swallowed up by massive bad debts. "Guo said. He looks forward to a clearer deployment of this year's government work report.