Playing ball
Thousands of unfinished property projects may soon receive financing support from banks.
The latest: By end-January, officials in 170 cities across 26 provinces had submitted whitelists of property projects to local financial institutions (Xinhua).
- The lists contain 3,218 projects in total.
ICYMI: On January 12, the financial regulator (NFRA) and housing ministry (MoHURD) instructed China’s 343 municipal governments to develop whitelists of projects for which banks should expedite credit approvals.
- Regulators ramped up the call last week, asking localities to deliver their first whitelists to banks by end-January.
Banks who received the whitelists are springing into action:
- 83 whitelisted projects in 27 cities have received fresh bank loans, with a total lending amount of RMB 17.86 billion.
What caught our eye: Per Xinhua, 84% of all whitelisted projects belong to non-state-owned companies.
- This follows earlier reports that many distressed private developers have had their projects listed for bank support.
Get smart: Projects on the whitelists are those with sufficient assets for collateral and whose presale funds haven’t been misused.
- These criteria are intended to mitigate banks’ concerns about default risks.
Get smarter: That said, risk-averse banks will take their time to scrutinize each project’s repayment capacity before approving loans.
- So far, progress looks good, but banks' willingness to play ball will be tested – especially once the most promising projects are already funded.