Regulators issue financing vehicles warning
Updated: 2013-05-03 15:32
By Wang Xiaotian (chinadaily.com.cn)
Risks related to loans to local governments through financing vehicles are generally "controllable", while financing through non-bank channels by these vehicles should be watched closely, Chinese banking regulators said.
"There are still some problems that need our attention as these vehicles are seeking multiple ways to raise capital," China Securities Journal quoted the China Banking Regulatory Commission as saying on Friday.
Vehicles have turned to trusts, wealth management products, bonds, and raising private funds to quench their thirst for money, but ultimately the majority of their capital comes from banks, it said.
"In the next three years, a large portion of the debts will have to be paid and local governments and their financing vehicles will face debt repayment pressure collectively."
The banking regulator said banks must issue their monthly statements with the amount of lending to vehicles and repayment conditions stated clearly.
CBRC has issued guidelines to banks in April to prohibit them from increasing the scale of loans made to such vehicles or guaranteeing vehicle debt.