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China asks HSBC and Citi to boost lending
Bloomberg
Published: February 22, 2009, 23:10
Beijing: China is prodding banks including Citigroup Inc and HSBC Holdings Plc to support the weakening economy by accelerating lending, after the threat of defaults caused them to rein in credit last month.
Foreign banks should "increase their contribution" to China's economy and lend more to small firms, the Shanghai branch of China's banking regulator said Saturday. An earlier report showed advances by foreign lenders in the city dropped in January. Shanghai accounts for 61 per cent of overseas bank lending in China, the watchdog said.
The demand for more funds comes as HSBC, Standard Chartered Plc, Bank of East Asia Ltd and Citigroup - the four largest foreign lenders by branches in China - contend with credit losses and weakening economies at home.
With Chinese banks first in line to lend to state-backed infrastructure projects, foreign rivals who chose to heed the call may have to shoulder more risk, said analyst Yang Qingli.
"Nobody can afford to stay on the sidelines anymore, even if it comes at the cost of lending to riskier companies," said Yang, Beijing-based head of research at brokerage BOCOM International Ltd. "That's what's left for foreign banks now."
Overseas banks cut local-currency advances in Shanghai by 1.78 billion yuan (Dh966 million) in January, even as local lenders extended a record 95 billion yuan of new loans, according to the city's central bank branch. A year earlier, foreign banks boosted lending by 12.3 billion yuan.
Bloomberg
Published: February 22, 2009, 23:10
Beijing: China is prodding banks including Citigroup Inc and HSBC Holdings Plc to support the weakening economy by accelerating lending, after the threat of defaults caused them to rein in credit last month.
Foreign banks should "increase their contribution" to China's economy and lend more to small firms, the Shanghai branch of China's banking regulator said Saturday. An earlier report showed advances by foreign lenders in the city dropped in January. Shanghai accounts for 61 per cent of overseas bank lending in China, the watchdog said.
The demand for more funds comes as HSBC, Standard Chartered Plc, Bank of East Asia Ltd and Citigroup - the four largest foreign lenders by branches in China - contend with credit losses and weakening economies at home.
With Chinese banks first in line to lend to state-backed infrastructure projects, foreign rivals who chose to heed the call may have to shoulder more risk, said analyst Yang Qingli.
"Nobody can afford to stay on the sidelines anymore, even if it comes at the cost of lending to riskier companies," said Yang, Beijing-based head of research at brokerage BOCOM International Ltd. "That's what's left for foreign banks now."
Overseas banks cut local-currency advances in Shanghai by 1.78 billion yuan (Dh966 million) in January, even as local lenders extended a record 95 billion yuan of new loans, according to the city's central bank branch. A year earlier, foreign banks boosted lending by 12.3 billion yuan.
