CBRC warns of current credit concentration risk

Editor's note International oil prices fell repeatedly, behind the economic fundamentals are still weak, the domestic economy has been a steady rebound in the signal, behind the various economic stimulus policies, especially credit policy has gradually become effective. Perhaps there is no taste in linking these seemingly unrelated economic phenomena. Sometimes economic problems are so subtle.　　Credit policy has now been put on the delicate balance beam, left or right, is a micro-pendulum or a big pendulum, all of the people in the market are closely concerned.　　More recently, management has warned more than once about the risk of concentrating on lending. Wang, secretary of the China Banking Regulatory Commission, said yesterday in a speech titled "Cooperative Sharing steadily promoting the development of syndicated loans", he warned against the risk of rapid credit growth. "In the process of rapid credit expansion, the risk of the concentration of credit assets is becoming more and more prominent, and the new bank loan may appear the trend of industry concentration, customer concentration and medium-term transition." The greater the concentration of bank loans, the more vulnerable to macro-economic fluctuations and business cycle, the more severe the situation may even appear systemic risk.　　"Syndicated lending is a good way to prevent the risk of a concentration of loans," Wang said. At the end of June, the central bank issued the "2009 China Financial Stability Report" also pointed out that banks should avoid blindly cherish loans, but also to avoid blind lending.　　In response to the focus on lending, the central bank says it should focus on the potential risks of centralised lending and should use credit asset restructurings, transfers and other credit risk management tools to diversify credit risk appropriately.　　　　In addition, the CBRC issued a "notice on further strengthening credit management" to ensure a balanced delivery of credit. Loans focused on government program data show that the current focus on lending is mainly to government-led projects, including a large number of local projects.　　In January-May this year, China's urban fixed asset investment growth rate of up to 32.9%, of which May single month growth was the highest in October 2004, and behind the high data growth, the local government has begun to replace the central level as the primary driving force and dominant. "Banks have been trying to tune the structure, but it's really hard to adjust." "The banks are now under a lot of pressure and the competition is particularly fierce," Shing, head of the Strategic management Department of ABC, said in an interview with the Daily economic news. In fact, the bank's internal rigid lending indicators have not, but the problem is that there is no loan, the proceeds will not come, so branches, sub-branches still have the impulse to lend. On the other hand, the bank is more stringent in terms of credit, at present, in addition to government projects, there is no more space for development, according to this view, the second half of the credit focus on the first half of the year will not have an essential change. "But current credit-prone local projects are not without risk." Shing further points out that local projects have financial guarantees and that there will be no serious risks in the short term, as this round of loans is mostly for projects with better local financial resources. But it is not yet certain whether the economic recovery is long-term, and once the pressure on local government revenues increases, the risk of the project willIncrease。 "Some local governments will provide banks with so-called ' consolation letters ' (Editor's note: A written statement by a letter to a creditor indicating that the sender has a moral obligation to repay the debtor), and that the risk is buffered, but these are not legally binding." "Shing further said," the current infrastructure projects in the bank's overall credit ratio is still increasing, which is a big risk.　　"In his view, infrastructure projects should not be funded by banks, and more and more transparent channels such as local debt should be opened to support infrastructure project financing."　　The policy is difficult to change urgently, in addition to the attitude of management, the problem of overcapacity, resource mismatch and the quality of bank assets, which is behind large-scale concentrated investment, has also attracted more and more experts and organizations ' attention.　　Ma, chief economist of Deutsche Bank Greater China, said in a recent report that the continued increase in infrastructure construction and fixed investment after 4 trillion would exacerbate medium-term inflationary pressures, banks ' bad-debt risks, asset bubbles and overcapacity. "Worried about waste of resources, overcapacity, rising non-performing rates and inflation, the central bank may begin to rein in local government investment as early as next spring," said Lu, a newly released second-half China economic strategy report by Merrill Lynch, Asia Pacific economist.　　He expects the austerity measures to be adopted will focus on bank credit and project investment.　　And Lu expects the central bank not to rush to raise interest rates until the end of next year, because the rate hike is too strong a signal of policy tightening that could affect the growth of investment in the property market. Shing pointed out that the current main tone of the regulatory layer is "growth", so the policy will not be an emergency "brake", but in this way, the bank's asset quality problems will face greater challenges. This year, the bank's clearance of non-performing assets, write-off is the main cause of the decline in non-performing balances, and next year the impact of this factor is not much, among them, he is particularly worried about real estate loans, because the real estate industry's rapid rebound is formed on the basis of the bubble, once again callback, there will be a big problem.