The State Council Has Deployed "Platform Loans" To Stop Illegal Guarantees.

In the sprint phase of the banking industry's self inspection and liquidation of local government financing platform loans, the State Council has made arrangements again: properly handle debt repayment and subsequent financing of construction projects, and strengthen lending management to banking financial institutions.

The executive meeting of the State Council held on the 26 day suggested that we must strengthen the management of the financing platform companies. First, we must promptly clean up and properly handle the debts of the financing platform companies.

According to the principle of classified management and differentiated treatment, we should properly handle debt repayment and subsequent financing of construction projects.

Two, we must sort out and standardize the financing platform companies set up by local governments, clarify functions and standardize operation.

Three, we should strengthen the financing management of financing platform companies and the lending management of banking financial institutions.

Four, we must resolutely curb violations committed by local governments.

One industry expert believes that the current governance of local government financing platform and regulation of bank behavior should start from two aspects: first, to strengthen the role of policy banks; two, to establish a comprehensive risk assessment model including project risk, platform risk and local fiscal risk in commercial banks.

In the current round of risk prevention and control of local financing platform, standardizing bank lending has always been regarded as one of the core links.

The experts pointed out that before 2009, the local financing platform had accelerated the construction of urban infrastructure and public utilities with various financing methods.

But since then, due to the active fiscal policy and moderately loose monetary policy, the local financing platform has entered a stage of rapid development. In actual operation, the financing mode has become the main mode of bank credit, especially the mode of credit based on commercial banks, and a large number of financing platforms have also sprouted everywhere.

"Many banks only take into account immediate interests and market share, blindly believe in local government credit, and support the financing platform as a good customer. They do not really value their credit risk."

A regulator pointed out recently that the banking platform loans doubled in 2009, and that the platform loans of the five banks grew by five times in the year and a half since 2009.

A piece of information obtained from authoritative departments shows that as of the end of 2009, the balance of local government financing platform loans reached 7 trillion and 380 billion yuan, an increase of 70.4% over the previous year, accounting for 20.4% of the general loan balance, and 3 trillion and 50 billion new loans for the whole year, accounting for 34.5% of all new general loans.

Regulatory statistics show that even in the first quarter of this year, a large number of platform loans continue to be put into operation.

In the first two months of this year, a provincial government financing platform loan increased by 15.9% over the beginning of the year, which was higher than the overall loan growth rate of the whole area (10.4%).

Since then, the CBRC has launched a heavy punches and norms, explicitly requiring the banking industry to complete the self inspection and clearance work of the local government financing platform credit business by the end of June.

At the same time, we must make good progress to ensure that before April, "more than half of the time and more than half of the tasks", we should take effective measures to rectify, reorganize and preserve the loans that have problems.

A local regulator told the first financial daily that after the self inspection and clean-up work was launched, local banks could no longer grant loans if they did not meet the relevant requirements.

The regulatory authorities should take remedial measures and put forward risk mitigation plans for defective loans such as project irregularities, incomplete contract procedures and insufficient risk mitigation.

The experts believe that there are two points to be considered in the current governance of local financing platforms and the regulation of bank behavior.

First, the role and role of policy banks and commercial banks are worth studying. Two, the risk assessment of commercial banks to local financing platforms needs to be strengthened.

The State Council executive meeting also stressed that we must resolutely curb violations committed by local governments.

Invalid guarantee is one of the main risks of local financing platform.

According to relevant laws and regulations, the guarantee letter issued by local governments and people's Congresses is invalid for loans from local financing platforms.

However, a supervisor in charge said that for the stock loans, the original local governments and the "letter of guarantee" issued by the people's Congress were not completely obsolete, but for incremental loans, banks need to add new specifications and requirements on the foregoing basis. They need to have sufficient financial strength guarantee entities, additional land assets, high-quality corporate equity and other legitimate value of collateral.