Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

China Developer’S 20% Loan After Bank Rebuff Signals Risk

Recommended Posts

http://www.bloomberg.com/news/2013-09-17/china-developer-s-20-loan-after-bank-rebuff-signals-risk.html

China property developer Zhang Fuguo was rejected by banks for a loan to help keep building two office towers in the central city of Zhengzhou. So he turned to a manufacturer of water and gas meters.

The 50 million yuan ($8.2 million) loan last month at a 20 percent interest rate will help Zhang pay workers and buy materials and was like “delivering coal on a snowy day,” he said. It was less so for one board member at lender Henan Suntront Technology Co. (300259), who abstained from approval on concern that Zhang’s company would fail to repay the debt.

So-called entrusted loans, in which banks are “entrusted” with funds as middlemen between companies, increasingly grease the wheels of China’s economy, withstanding a crackdown on shadow banking this year and rising to a record 293.8 billion yuan in August. The increase was part of a surge in non-bank credit that may add to default risks threatening Premier Li Keqiang’s efforts to sustain 7 percent expansion this decade.

“The more that we have financial activity taking place in the shadow-banking system, under the current regulatory standards and regime, the more risky that it is,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong.

China is going to have a nasty collapse at some point. The pressure is clearly on the builder now to finish and sell off the buildings otherwise he'll get crippled by the debts.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   204 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.