China State Banks Earmark $8 Billion For Property Projects

(Bloomberg) -- China’s state-owned lenders have earmarked at least 60 billion yuan ($8 billion) of loans for property projects eligible for support, heeding Beijing’s call to boost lending to the beleaguered housing market. 

Agricultural Bank of China Ltd. approved more than 40 billion yuan of loans for real estate projects on white lists, the lender said in a statement Monday. China Construction Bank Corp. extended 3 billion yuan to five property projects, with more than 20 billion yuan of approved loans in the pipeline, it said late Friday. 

Local branches of Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. also moved to offer financing support to some projects, according to statements over the weekend. They didn’t reveal the total amount of loans that had been extended or are being planned.

The announcements came after Beijing urged local authorities last month to better support financing needs of developers and draft lists of eligible projects. Policymakers ordered banks to step up lending to the property sector, which saw credit growth last quarter slow to the weakest in more than a year, undermining the ability of developers to complete homes. 

By establishing a “coordination mechanism,” central government officials asked major banks to approve a white list of property projects and requested local authorities to ensure progress. A range of housing projects from cash-strapped developers including Country Garden Holdings Co. and Sunac China Holdings Ltd. have been put on the white lists, the firms have said. 

The big four state lenders all vowed to actively meet “reasonable financing demand” of developers and eligible projects under the coordination mechanism. Since late January, five national state-owned banks have been reviewing more than 8,000 residential projects on potential white lists, according to a tally by China Index Holdings.

Still, authorities are struggling to arrest a slowdown in China’s property market, which saw new home sales last month tumble 34.2% from a year earlier. 

Sales in new-home market remained subdued despite a jump in transactions of existing homes during the week-long Spring Festival holiday, limiting recovery of cash flow from sales much needed by beleaguered developers. Daily average sales of new homes shrank 27% by area from a year earlier, according to a tally on 25 major cities tracked by China Index Holdings.

“While homebuyer visits to new-home projects climbed during the holiday, buyers remain on a wait-and-see mode,” said Chen Wenjing, associate research director at China Index Holdings. “The property project financing supports from state lenders may gradually shore up their confidence.”

A gauge of Chinese developers falls as much as 3.1% on Monday following a 7.1% surge last Friday.

(Updates with new-home sales in eighth paragraph.)

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