China steps up 'whitelist' mechanism for property sector - media

KWG group

16/02/2024 06:03

HONG KONG, Feb 16 (Reuters) - Five state-owned Chinese
banks have been matched with more than 8,200 residential
projects for development loans under the "whitelist" mechanism
aimed at injecting liquidity into the crisis-hit sector,
government-backed media The Paper reported.
    The high number of projects already approved for possible
support highlights the government's efforts to free up funding
for the debt-riddled industry, although it is unclear how many
will secure loans.
        "The progress for whitelist projects is faster than
expected and it looks like regulators have put much higher
pressure on banks to lend to developers this time," said Raymond
Cheng, head of China research at CGS International.  
  
    Under the "project whitelist" mechanism launched on Jan. 26,
city governments are recommending to banks residential projects
suitable for financial support, and are coordinating with
financial institutions to meet projects' needs.
    The mechanism is a key plank of Beijing's efforts to
stabilise the sector's debt crisis and boost confidence in an
industry that accounts for a quarter of China's GDP.
    The sixth state bank, Postal Savings Bank of China
 1658.HK , has already approved some loans after receiving
"whitelist" projects with 5.7 billion yuan ($792.5 million) of
financing needs, although it has not given details on the number
of projects involved, The Paper reported.
    Among the other five state-owned banks, Industrial and
Commercial Bank of China  601398.SS , Agricultural Bank of China
(ABC)  601288.SS  and China Construction Bank  601939.SS  had
received more than 2,000 applications each.
    Bank of Communications  601328.SS  had received 1,442
projects as of Feb. 13, while Bank of China  601988.SS  had
approved 75 projects involving close to 40 billion yuan as of
Monday, after reviewing more than 110 applications.
    ABC had approved nearly 5 billion yuan in loans for more
than 10 projects, most of which did not involve state-owned
developers, according to The Paper.   
        CGS International's Cheng expected the 8,000 projects
had total financing needs of 3.2 trillion yuan, one third of
which would be new loans. 
    Following the media report the Hang Seng Mainland Properties
Index  .HSMPI  gained more than 4% on Friday, with defaulted
Shimao Group <0813.HK, KWG Group  1813.HK  and Kaisa Group
 1638.HK  jumping more than 10%.
    A number of distressed developers, including Sunac China
 1918.HK , Greenland  600606.SS  and CIFI  0884.HK , said last
week local governments had vetted and approved some of their
projects for the whitelists. 
    China aims to ramp up financing for residential projects but
banks' reluctance to lend to the sector could be a major
obstacle for distressed developers most in need of funds.
    Developers and analysts have said any such loans can only be
used for ensuring the completion of selected projects, and
cannot be used to repay debt or help regain financial strength. 

($1 = 7.1929 Chinese yuan renminbi)

 (Reporting by Clare Jim; Editing by Stephen Coates)
 ((clare.jim@thomsonreuters.com;))