(Bloomberg) -- China aims to boost large banks’ loans to private companies to at least one-third of new corporate lending, said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission. Shares of lenders retreat on the mainland and in Hong Kong.
ADVERTISEMENT
Key Insights
ADVERTISEMENT
- Guo’s comments are the latest attempt by authorities to try to improve funding access for China’s non-state companies, which often struggle to get bank loans
- It’s the first time financial regulators have given targets on private lending, a reflection that earlier efforts haven’t triggered the necessary credit activity
- Policy makers need to make sure that China’s private firms -- who already face challenges taking on state-owned behemoths -- survive amid a plunging stock market, record corporate defaults and a cooling economy
- It will likely increase market concern on banks’ "civic duty" and potential increase in NPL ratio amid economic slowdown, and negative for short-term sentiment: Huatai
Digging Deeper
- The target for small and medium-sized banks is higher, at two-thirds of new corporate loans, Guo said in an interview with Financial News
- Guo wants to see loans to private companies account for at least half of total new corporate loans in three years
- Banks’ loans to non-state companies accounted for less than a fourth of total loans as of end-Sept
Markets
- China Construction Bank retreats 2% as lenders are among biggest drags on Hang Seng Index on Friday; HSBC -1.2%, ICBC -2.6%, Bank of China -2%, China Merchants Bank -4.9%
- On mainland, Bank of Shanghai -4%, China Merchants Bank -4%, ICBC -3.3%, Agricultural Bank of China -2.9%, Industrial Bank -2.5%, Bank of China -1.6%, Bank of Communications -1.3%
Get More- Remarks follows seminar for private companies hosted by President Xi Jinping on Nov. 1
©2018 Bloomberg L.P.