China Banks Curb Property Loans to Local Government Firms
- Lenders impose new restrictions on LGFVs, people familiar say
- Move may add to slump in land sales, key to government revenue
The China Banking and Insurance Regulatory Commission building in Beijing.
Photographer: Yan Cong/BloombergThis article is for subscribers only.
Several of China’s largest banks have become more selective about funding real estate projects by local government financing vehicles, concerned that some are taking on too much risk after they replaced private developers as key buyers of land, people familiar with the matter said.
At least five state-run banks have imposed new restrictions this year on loans to weaker LGFVs seeking to buy land and develop new real estate projects, said the people, asking not to be identified discussing a private matter. Banks are being more stringent in assessing the financial strength of the local economy and the sales prospects of the projects, the people said.