Banks Cut Funding to Land Kings

Land kings are now considered high risks for banks as they cut funding to these developers.

iFeng: 部分银行停止对地王放贷 开发商:这不怕 最怕监管层
Documents obtained by reporters, the bank called for strengthening the front-end financing management towards the national top 20 developers, financing ratio can not exceed 60% of the cost of land and other industries will not exceed 50%, in principle, to intervene in 2015 three after the quarter to take the land and the high cost of the project. At the same time, the document requires strict control of credit issued commercial office projects.
It's not only land financing that is being cut, but also any follow on financing:
Analysts said the bank does not intervene king, mean that these high-priced land developers want to get follow-up loans from banks, through mergers and acquisitions or equity financing partners, thus the possibility to participate in the development of the king is reduced. Currently, bank regulators did not see the introduction of relevant policies, it should be for individual banks or real estate project risk control policy adjustments.
The developers are not worried because banks are acting independently. They don't fear it, rather they fear regulators will step in:
In this regard, a developer on condition of anonymity admitted that the change in policy of individual banks is not terrible, terrible is regulators change their attitude towards the ever emerging land king situation.
This follows restrictions on listed companies ability to raise cash as well.

Reuters: China to tighten fundraising rules for listed property firms
China's stock regulator is preparing to tighten regulation of listed real estate companies using refinancing tools to supplement cash flows and pay off debt, according to comments by an unnamed official quoted in the official People's Daily.

The paper quoted an unnamed official from China's Securities Regulatory Commission (CSRC) saying during an internal conference on Monday that real estate companies should only raise capital for construction, instead of buying land and paying back bank loans.

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