ICBC 'won't rush to lend or stop lending'

But move to stop rolling some loans over seen as clampdown by China

BEIJING: China's largest bank, ICBC, said yesterday it has stopped rolling over some loans to slow credit growth after a surge at the start of the year, offering the latest evidence of a government-directed clampdown on lending.

In a statement issued after a week of reports and rumours of China's monetary tightening that have roiled global markets, the world's biggest lender by market value stressed that it would not halt new lending.

But given that Chinese companies typically borrow for short periods of as little as six months, and then roll the financing over, Industrial and Commercial Bank of China's move is tantamount to calling loans in.

'ICBC will not rush to lend, nor will it stop lending,' the bank said. 'In the first 20 days of January this year, due to concentrated capital demand from ongoing projects, the bank's credit offering was a bit fast but was still below that of the same period last year,' it said.

For the rest of this month, 'due to the expiry and return of a concentrated volume of existing loans and repayment of credit card debt, loan growth has eased,' it added.

World markets have been betting that China, the first major economy to regain cruising speed after the global slump, will lead economic recovery this year and reports of Beijing's action stoked fears that it may step too hard on the brakes.

Chinese banks extended 1.45 trillion yuan (S$298 billion) in new loans during the first 19 days of the year as they scrambled to front-load lending before policy tightening shut the door on them, local media have reported.

Chinese officials, however, have made clear they do not want to freeze lending, only to see banks lend more evenly to avoid the kind of surge that now seems to be occurring.

'Banks must reasonably control new lending, manage the pace well and try to achieve the even issuance and steady growth of loans quarter by quarter,' Mr Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), told a meeting, according to a notice on the agency's website.

To that end, regulators have ordered banks to call back some of the loans extended this month, the official Securities Times reported.

Officials are targeting about 7.5 trillion yuan in new loans this year, down from a record 9.6 trillion yuan last year. That would still be the second-highest total ever and more than enough to power the economy to 9.5 per cent growth this year, according to a Reuters poll.

Commercial banks that had made large amounts of loans this month were being instructed not only to halt new lending but also to recall already-issued loans as soon as possible, the Securities Times quoted an unnamed source as saying.

REUTERS

Source: Straits Times, 28 Jan 2010.