Regulators Stopped Funding Bridging Loan &Nbsp; Local Financing Tightened Across The Board.

In June 9th, a person familiar with the matter said that commercial banks recently received the notice on regulating bridging loans from the regulatory authorities (hereinafter referred to as the notice), which explicitly stated that "from the date of issue, all units shall not issue project capital bridge loans, financial property financing bridge loans, and Bridge loans for enterprises to issue bonds, short-term financing bills, medium-term notes, issuing shares and equity pfer."

"This means revising part of the credit policy in early 2009," a senior City firm analyzed.

By the end of 2008, after the central government launched the "four trillion" economic stimulus package, the CBRC has liberalized equity loans such as "merger and acquisition loans" and "capital loans" and set up several restrictive conditions for the issuance of bridging loans.

But these conditions were intentionally or unintentionally blurred in the subsequent practical operation, and capital bridge loans gradually "deformed".

The "notice" came out, which means that after the 2009 local financing platform credit boom, capital bridge loan, a leveraged tool for local financing platforms, will be severely restricted.

Bridging loan tracing

In 2009, under the investment driven by the four trillion plan, the local matching funds formed a huge gap.

Under the circumstances, the release of capital bridge loan arises at the historic moment.

At the beginning of 2009, in the ten measures to adjust part of the credit supervision policies promulgated by the CBRC, commercial banks were allowed to broaden the scope of project loans, and to allow the banking financial institutions to issue bridging loans to non productive project sponsors or shareholders within a certain amount on the premise of meeting the national macroeconomic policy guidance, the owners' good reputation and the relevant government departments that have agreed to carry out pre project work or have been included in the national development and Reform Commission's planning projects.

A series of restrictive attributives set by the policy make it clear that bridging loan is a "project capital loan".

A joint-stock bank company business department analysis, the so-called non productive projects, refers to different from steel, energy and other productive projects of public utilities, mainly to infrastructure investment, municipal construction, Luqiao project, livelihood projects and other key areas of support.

"Bridging loan is aimed at the lack of project capital at that time, mainly breaking through the restrictions on capital items of some major projects at that time."

According to the above bank personage analysis, after the release of bridging loan, the leverage of funds has expanded rapidly.

If the project capital requirement is 100 million, the original 1 hundred million of the funds can only be a project, and now we can use 1 hundred million to pry 100 million bank loans, while doing two projects, or even more.

A bank's internal training data show that there are two characteristics of bridging loan: first, the speed of examination and approval is fast; the bridge loan can not be evaluated and evaluated; after the loan procedure is complete, it only takes about 15 working days from data collection to loan issuance, which can completely solve the urgent need for the construction of passenger project funds; and the two is directional services.

Banks can generally make corresponding financing plans according to the actual needs of customers to solve the financing needs of customers.

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Loan "deformation"

However, in the first half of 2009, in the frenzied credit influx, bridging loans to solve the problem of insufficient capital of the project began to become the driving force and weapon of the local financing platform.

According to the three premise of bridging loan mentioned above, bridging loan means only to invest in the field of public infrastructure construction. The main lending entities in this area are local financing platforms. In addition, the borrowers are limited to sponsors or shareholders rather than item company, thus making the financing platform companies of local governments become the main financing entities of bridging loans.

Under the competition of credit competition in 2009, banks and local financing platforms needed each other, and each investment office was good, exposing the risk of bridging loan early.

The risk management department of a joint-stock bank said that the bridging loan release virtually encouraged the local government to scrambling for projects in a random way, while the leverage increased and the risk of banks increased.

More serious is that, in the actual operation process, many banks ignore the three prerequisites of bridging loan, and invest large amounts of loans in the NDRC project, and the bridging loan as a short-term financing tool is extended.

A commercial bank source revealed that in the first half of 2009, some bridging loans lasted for three to five years.

The bigger problem is the confusion brought about by the operation of local financing platforms and the opaque liability information.

A large number of local financing platforms are short of capital and bank loans are diverted to others. The flow of capital loans is difficult to effectively monitor.

The head of a state-owned big bank risk management department analyzed that last year, some investment and financing platforms obtained a project capital from a bank "bridging loan" and then applied for another project to another bank.

"Because the local financing platform accounts can not be monitored, most of them have many item company. A item company gets the bank credit in the name of liquidity loans, and then centrally integrates to the platform account. The platform can be allocated to the subordinate item company in the form of capital."

Introduction of the above persons.

In the second half of 2009, the lack of capital and the misappropriation of loans caused the watchdog's vigilance.

In October 2009, the CBRC stressed once again that bridging loans can only be used for non productive projects, and no bridge loan for productive projects is strictly prohibited. After the original planned funds are in place, the principal and interest of bridging loans should be returned, and preferential interest rates should not be given, and they should not be occupied for a long time, nor should they be used as project funds.

Suspension of capital bridge loan

In 2010, the intention of regulators to regulate bridging loans was obvious and began to strictly control the investment of bank loan projects.

The above joint-stock company business department personage analysis, "bridging loan tightening background is the supervision of local financing platform loan tightening."

The notice made clear provisions for new and old loans. Except for the project capital bridge loan, the financial nature capital bridge loan, and the provision of bridging loan for enterprises to issue bonds, short-term financing bills, medium-term notes, issuing shares and equity pfer, the CBRC also strictly restricted the appropriation of the stock loan.

The notice stipulates that before the borrower obtains the project approval procedures, he shall not directly or vary the loan to the project owners, project sponsors and shareholders for the construction of fixed assets projects in the name of providing working capital loans, pre project loans and bridging loans.

For the stock bridging loan, we have made a request from the time limit and the mortgage respectively: the bridging loan period should not exceed 1 years, and it is not allowed to extend the period.

The bridge loan should be required to provide a full guarantee for the loan of the borrower, but it shall not accept the pledge of the bridge loan with the agreed financing agreement; the unit that has agreed on the financing agreement shall not grant a bypass loan to the borrower, nor does it provide a guarantee for the borrower to request the third party to request a bypass loan.

At the same time, the notice stipulates that all units should not be regarded as capital in connection with the project capital bridge loan. The borrower should supplement his capital and take steps to recover the loan in advance.

Other types of bridging loans should also be implemented in accordance with the relevant agreements, requiring borrowers to implement follow-up financing as soon as possible and return bridge loans.