Chinese Watchdog Slaps Limit on Nation's Real Estate Trust Business
Liao Shumin
DATE:  Jul 13 2019
/ SOURCE:  yicai
Chinese Watchdog Slaps Limit on Nation's Real Estate Trust Business Chinese Watchdog Slaps Limit on Nation's Real Estate Trust Business

(Yicai Global) July 12 -- Chinese regulators recently summoned 10 trust companies for a meeting amid a too rapid and expansive growth in their real estate trust businesses, and one of the firms, China Everbright Trust, has already suspended the business, according to media reports.

At the meeting, the China Banking and Insurance Regulatory Commission demanded that the scale of the country's real estate trust business this year must not exceed its size at the end of June, saying that projects which have been filed can continue, but unfiled projects must be halted. Urban renewal and renovation projects are not affected by the guidance for the time being, The Paper reported today.

"The current requirement is that the stock in the third quarter doesn't exceed that in the second," 21st Century Business Herald reported, citing an insider from China Everbright Trust. "We think the business is suspended, while we await further guidance."

Zhongrong International Trust, AVIC Trust, China Industrial International Trust, and Bank of Communications International Trust were also among the firms summoned.

A CBIRC department head has publicly stated before that as of the end of May, the balance of real estate trust assets was 15 percent higher year on year at CNY3.2 trillion (USD458 billion), accounting for 14 percent of total trust assets. Some firms' real estate trust businesses have grown too quickly, while others have compliance issues and hidden risks, he added.

The regulator this year has stressed repeatedly its policy of continuous regulation of the real estate market. "We must face up to the phenomenon of real estate financialization, and the over-financing in real estate will not only squeeze credit loan resources from other industries but also encourage real-estate investment speculation," CBIRC Chairman Guo Shuqing has said.

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Keywords:   Real Estate Investment Trust