Local Financing Platform To Raise Money Secretly: In The Name Of Affordable Housing Loan

Recently,

CBRC: lowering the old and controlling the new

The CBRC recently issued the circular on effectively supervising the loan risks of the local government financing platform in 2011, requiring banks to strengthen the loan management of local financing platform, promote the rectification of stock platform loans, strengthen their regulatory constraints, unify on-site inspections, strictly monitor the risks of "rectification for general corporate loans", and increase the intensity of accountability and punishment.

"The list and risk situation should be reported to the banking regulatory bureau quarterly."

A large business related departments said.

Each bank is required to set up a "list system" management system, which includes at least the basic situation of the financing platform, the credit, the term structure of the loan, the direction of investment, the qualitative risk of the risk and the source of repayment.

At the same time, the approval authority of local financing platform is also returned to the head office, while branches are only responsible for front office marketing and post loan management.

The CBRC also requires banks to promote asset maintenance and risk mitigation of stock platform loans.

A branch of a bank's coastal area said: "the platform loan that requires us to mature is not allowed to be renewed and borrowed."

The CBRC also calls for strengthening the provision constraints and capital constraints of local financing platforms.

Banks are required that the provision coverage rate and loan provision rate of local financing platform loans should not be lower than the average level of loan provisioning.

At the same time, for the total coverage, basic coverage, semi coverage and no coverage platform loans, the risk weights of loans should be calculated according to 100%, 140%, 250% and 300% respectively in the first quarter of 2011.

Borrow "shadow bank"

There are policies and solutions.

Just when the CBRC strictly controls the loan of local financing platform, some high quality local financing platforms are still favored by banks. Many banks, especially those with loan impulses, are trying to avoid regulation by various means.

Construction Bank's online public information shows that in March 31st, the bank issued a total of 4 profit earning trust loan financial products, a total of three products to raise funds eventually diverted trust companies, in the name of trust loans to invest in local financing platform, of which 14, 15 products are invested in Guizhou Expressway Development Corporation, the total size of 500 million yuan.

In addition, the Tongling city new town construction investment limited liability company's special asset beneficial investment investment trust product was launched by the national yuan trust and the industrial and Commercial Bank of China.

The 2010 annual report of Dayang creation revealed that in 2010, it purchased 50 million trust funds and trust products.

According to the product profile released by Huaxin trust, the trust fund is used in a single or combined way of equity investment, equity investment, loan and other creditor's rights in the infrastructure construction projects in Liaoning Province, which conform to the conditions of the trustee's capital utilization, or enterprises or projects with better growth and steady income in various industries such as logistics, tourism and services.

In addition, the financing channels for local financing platforms also have the means of entrusting loans.

Fengtai District has obtained 2 billion entrusted loans to meet the capital needs of the regional government investment projects and promote the construction of Beijing's southern city.

In this regard, Fengtai District Finance Bureau official also said that "entrusted loans is an important measure for Fengtai District to solve the financing problem."

"In fact, liquidity is quite abundant now. Local financing platforms often go to local large enterprises to ask them to lend loans to the platform. The intermediary bank acts as the entrusted loan bank.

There is no lack of game between local government executive orders and local state-owned enterprises.

A large Jiangsu branch of the relevant business sector said.

A person close to regulators said: "this is a central enterprise's own funds or loans to banks, it is not known.

It is not known how effective banks are.

Dark road loan

According to the relevant provisions of the CBRC, the new loans of platform customers must comply with the People's Republic of China Highway Law and the State Council's notice on strengthening the management of state-owned land assets, which includes public rental housing, low rent housing and shanty towns which are capable of repayment. These are the major items approved by the State Council or approved by the State Council and other conditions stipulated by the state.

Affordable housing financing platform has become the only loan access channel, the local governments are different in order to protect the housing in the name of trying to obtain loans.

There is another new method.

A large coastal bank insider told the newspaper that at present, the bank is considering using long-term letter of credit pledge to help local financing platform to obtain loans.

A forward letter of credit is a letter of credit which is issued by the issuing bank or the drawee bank when it receives the documents of the credit. It is the letter of credit issued by the bank (i.e. the issuing bank) to the exporter (i.e. the beneficiary), which authorizes the exporter to issue a time draft drawn on the bank or importer in accordance with the requirements and instructions of the importer (that is, the applicant), so as to ensure that the draft must be accepted when the bill and documents are in conformity with the terms and conditions of the letter of credit, and the guarantee document will be fulfilled when the bill is due to expire.

"If it is a letter of credit to open foreign currency, it will also need to register the local financing platform abroad. However, the low interest rate of foreign exchange loans will bring low financing cost to the enterprises, but if it is the renminbi credit, it will do much better."

A bank international business department personage expresses.

These people also said: "this single business can not be made by one department. It is necessary to cooperate with other departments such as joint company, international settlement department, trade finance department and so on.

But the regulatory risk is relatively large. "