Chinese Regulators to Reduce Real Estate Firms' Access to M&A Loans

Chinese Regulators to Reduce Real Estate Firms' Access to M&A Loans

Liao Shumin

Date: Thu, 02/01/2018 - 15:31 / source:Yicai
Chinese Regulators to Reduce Real Estate Firms' Access to M&A Loans
Chinese Regulators to Reduce Real Estate Firms' Access to M&A Loans

(Yicai Global) Feb. 1 – China’s banking regulators aim to restrict access to loans used for mergers and acquisitions in the country’s real estate sector in response to a rapid rise in lending volumes since 2015.

The China Banking Regulatory Commission will introduce macro-control policies to strictly supervise the movement of M&A loans in the property industry, it said in a circular released on Jan. 29.

The document, titled Circular on Regulating the Operation of M&A Loan Business, stipulates that any lending related to M&A in the industry must concern property projects, in which 25 percent of construction has already been completed. It is hoped that the rule will reduce the number of firms looking to secure loans in a fraudulent manner,

Some banks have received fines in the past due to violations concerning development loans or real estate loans. The CBRC imposed a CNY200,000 fine on the Hangzhou office of China Zheshang Bank on Jan. 26, for providing loans for projects, in which capital funds were not yet in place.

Real estate firms will encounter more difficulties in facilitating finance programs with the stricter control of regulators over the illegal inflow of bank credit and trust funds into the market, said Zhang Dawei, a chief analyst at Centaline Property.

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Keywords: Real Estate M&A Loan, Shanghai, Banking