Shanghai CBRC Halts Banks' Business With 6 Property Agencies

  • Property agencies punished include Homelink, Pacfic Rehouse
  • Central bank said unauthorized mortgage loans increased risks

China’s banking regulator in Shanghai is halting business between commercial banks and six real estate agencies for a month, the latest in a string of measures to contain risks in the housing market.

The suspension, which takes effect Monday, covers agencies including the local arms of Beijing Homelink Real Estate Brokerage Co., Pacific Rehouse Co. and Shanghai Hanyu Property Brokerage Co., according to a statement by the China Banking Regulatory Commission’s Shanghai office on the city’s official Weibo microblog account. The regulator will also suspend the personal mortgage business for two months of seven local branches of banks including Industrial & Commercial Bank of China, Bank of China Ltd. and HSBC Holdings Plc for violations of lending rules.

The move followed an initiative by the Shanghai branch of the People’s Bank of China in late March to strengthen monitoring of home-loan risks and ensure a “stable development" of the property market, the statement said. China’s central bank Governor Zhou Xiaochuan last month told banks to better assess customer creditworthiness in mortgage lending to reduce risks, adding that unauthorized loans by real estate agents increased the chances of bad debts.

‘Relatively Prudent’

While the overall management on residential mortgage loans is “relatively prudent,” some real estate agents advanced the transactions by providing down-payment loans and bridge loans, the statement said. Some commercial banks also violated rules with their practices on mortgage loans, according to the statement.

The municipal government of Shanghai has made moves to stem a surge in property prices in the metropolis, including tightening approval criteria for non-resident homebuyers and raising down-payment requirements for some second homes. Even after the tightening was introduced, new-home prices in the hub jumped 30.5 percent last month from a year earlier.

Homelink will fully support the authorities’ efforts and will examine its practices, the firm said in an e-mailed statement, adding its business is “normal and ordered.” Calls to Pacific Rehouse and Shanghai Hanyu Property offices in Shanghai went unanswered on Monday. ICBC and BOC couldn’t immediately comment on the statement, while calls and e-mails to a representative at HSBC went unanswered.

The Shanghai Stock Exchange Property Index, which tracks real estate-related stocks listed on the mainland exchange, dropped 0.7 percent as of 3:23 p.m. local time.

— With assistance by Emma Dong

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