China’s six mega banks have promised financial support to the tune of more than $181.4 billion (1.3 trillion yuan) to 17 builders in an effort to shore up the battered property market.
Among them, Yicai reported on November 25 that Industrial and Commercial Bank of China, the world’s biggest bank in terms of assets, would provide the most at $91.5 billion for 12 real estate firms.
Meanwhile, other banks — Postal Savings Bank of China, Bank of China, and Bank of Communications — followed with $39 billion, $30.7 billion, and $16.7 billion, respectively.
The outlet noted that China Construction Bank and Agricultural Bank of China still have not specified their loan amounts. But China Construction Bank ranks second by financing 8 property developers.
The move came after the People’s Bank of China announced it plans to offer nearly $28 billion in interest-free loans to commercial banks to increase lending to the property market, maintain real estate investment, and help mortgage borrowers.
According to Bloomberg, the primary purpose of the financial support is to target only “the stronger firms that have so far survived the crisis” and ensure on-time delivery of stalled projects.
Li Kai, founder of Beijing Shengao Fund Management, said, “The core of the policy is to build a firewall between developers that have already defaulted and those that haven’t.”
Therefore, China’s most-indebted real estate giants such as China Evergrande Group and Sunac China Holdings would be excluded from the state-owned banks’ financing.