Cheers around homes as big banks aid developers

China's four major state-owned banks agreed to provide fresh financing to embattled property developers, and the central bank and the banking regulator require banks to deliver property loans steadily.

Bank of Communications (3328) said yesterday it would provide a credit line of 100 billion yuan (HK$109.1 billion) to China Vanke (2202) and one of 20 billion yuan to Midea Real Estate (3990), two private developers.

China's sixth largest state bank by assets added that it will offer more financing services, including loans for real estate development, personal housing mortgage and merger and acquisitions.

This came after the deputy governor of the People's Bank of China, Pan Gongsheng, said financial institutions should not hedge risks too much and that the PBOC planned to provide 200 billion yuan of interest-free loans to six commercial banks to ensure pre-sold homes could be completed.

Agricultural Bank of China (1288) followed up by announcing a cooperation with five builders - China Overseas Land and Investment (0688), China Resources Land (1109), Vanke, Longfor (0960) and Gemdale Corp - by providing loans to builders and homebuyers.

Bank of China (3988) promised to provide Vanke with an international credit line of up to 100 billion yuan or its foreign currency equivalent, while Industrial and Commercial Bank of China (1398) said it will provide international credit lines of tens of billions of yuan to real estate companies such as Longfor and Country Garden (2007).

Moreover, the PBOC and the China Banking and Insurance Regulatory Commission underlined yesterday that banks should treat state-owned and private developers equally and encouraged them to focus on supporting good quality builders.