The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
China’s banks are being offered cash and given instructions to lend more, as regulators attempt to support a slowing economy.
The banking and insurance regulator has asked financial institutions to “earnestly implement” plans to help reduce financing costs for small firms, saying that big lenders should “take the lead”, according to a statement posted on its website. Meanwhile, the People’s Bank of China is said to plan the use of its Medium-term Lending Facility to encourage bank loans and investment in lower-rated corporate debt, China Business News reported.
The PBOC will provide commercial banks with the same amount of MLF funds for the portion of their lending exceeding the monthly loan quota and for investment in corporate bonds rated AA+ and above, according to the report. It said banks will receive double the amount of MLF loans for investment in corporate bonds rated below AA+.
New credit as a percentage of GDP declined to an almost-three-year low in June, a Bloomberg Economics gauge shows, as a government-driven campaign to reduce financial risk couples with a slowing economy. Data released Monday showed that output in the second quarter slowed, and factory activity cooled more than expected, with attention now turning to how the government can mitigate the effects of the escalating trade war.
The PBOC’s financial research institute director Sun Guofeng already indicated room to ease credit policy in an earlier interview. The central bank didn’t respond to a fax sent Thursday seeking comment on the reports.