China's central bank has stepped up its support for several distressed developers by allowing banks and bad-debt managers to loosen restrictions on some loans to ease a cash crunch, according to people familiar with the matter.
The People's Bank of China held a meeting with about 20 major banks and asset-management firms last week to help resolve crises at a dozen large real estate firms including China Evergrande (3333), they said.
The central bank sought looser requirements on a range of financing, from lending for property acquisitions to extending maturities on debt, the people added.
The meeting sends the strongest signal yet of Beijing's support for cash-strapped developers as virus lockdowns and a sharp sell-off in Chinese stocks threaten to sap consumer confidence and further erode housing sales.
The moves discussed at the PBOC meeting included looser acquisition financing requirements when target projects are in early development stages, said the people. In previous years, banks were told not to lend for less-developed housing projects, as regulators sought to curb excessive borrowing, local media reported at the time.
The central bank also guided financial institutions to extend borrowings already overdue if developers provide additional credit support such as pledging more assets, the people added. The PBOC also reiterated its support for struggling firms through real estate development loans, said the people.
About 12 developers including Evergrande, Sunac China (1918), and Shimao (0813) will be supported in the first wave of the program. The list of developers may change based on the evolving situation, the people said.
Meanwhile, the State Council has issued a notice to encourage banks to cut interest rates and sacrifice profit in order to inject capital into the real economy.
Separately, China's biggest state-owned banks lowered rates on some deposits of consumers by 10 basis points in response to the government's call for help in backstopping the world's second-largest economy.
