Twenty-one banks agreed in Shanghai today to sell loans on China’s interbank market as the government allowed the transactions for the first time.
The banks include Industrial & Commercial Bank of China Ltd., HSBC Holdings Plc and China Construction Bank Corp.
The global financial crisis showed the inefficiency of risk management, People’s Bank of China Governor Zhou Xiaochuan said at a ceremony in Shanghai. The "loan transfer” plan is a new product in the nation’s interbank market and will improve banks’ risk-management ability and will help with the central bank’s macro control, he said.
Chinese banks have increased their loans by an average 20 percent annually since 2005 to sustain economic growth. Lenders had 45.7 trillion yuan of local-currency denominated loans outstanding as of August 31, according to the central bank.
The nation’s policy makers aimed to cap new loans at 7.5 trillion yuan in 2010, down 22 percent from a record last year, on concerns that credit boom will lead to asset bubble and rising amount of bad loans.
The start of a centralized and regulated “loan transfer” market will improve liquidity of loan assets at banks and the pricing mechanism of credits, ICBC Chairman Jiang Jianqing said at the ceremony. It will also allow the market to better set interest rates, he said.
