Beijing Banks Violated Regulations, ￥36 B in Consumer Loans Went Into Real Estate

Caijing: 9银行违规输血地产超360亿 未来若有违规或面临更严惩罚

Another confirmation of tightening property market regulation. On June 20, the "Report of the State Council on Auditing Work of the Implementation of the Central Budget and Other Fiscal Revenues in 2017" (hereinafter referred to as the "Report") issued by the National Audit Office showed that the audit found that nine large state-owned banks illegally provided financing to the real estate industry. In addition, 36.87 billion yuan, part of the individual consumer loans that were spot checked, actually flowed into the property market. The industry believes that this audit is a big inspection of the current real estate deleveraging. If various types of funds violate the regulations in real estate in the future, it is expected that the bank's credit department may face severe punishment.

According to industry insiders, the Audit Office annually audits the more prominent problem areas in the current market. For the bank's illegal "blood" property market data was included in the "report", the Central Plains chief analyst Zhang Dawei said that the release of the data itself is the performance of the property market to strengthen control. Yan Yuejin, research director of the Think Tank Research Center at the Yiju Research Institute also believes that this is obviously a big inspection of the current real estate deleveraging, which is good for the industry.

...However, Zhang Dawei pointed out that the Bank’s unlawful provision of financing to the real estate industry with funds of RMB 36.287 billion may not be all, particularly since 2017, when consumer loans suddenly skyrocketed, there is suspicion of going to real estate. Now that financial regulation has led funds into entities, banks have often violated regulations, packaged funds, and raised costs to enter real estate, which has increased market risk, while the real economy has still not received funding.

This is not a small number even if only 36 billion. In 2017, individual mortgage lending in Beijing totaled 136.6 billion. That's an increase of 27 percent beyond what was reported. If the real total is higher, the drop off in lending reported at the end of 2017 greatly overstated the slowdown in real estate lending. this helps explain why real estate prices keep zooming ahead despite government regulations. The discovery signals the government has caught on to the diversion of credit into real estate. Now the question is will official mortgage lending increase as this credit moves into the proper channel or will housing activity and home prices begin declining as credit restrictions kick in?

Elsewhere, banks are tightening up where credit flows through credit and debit cards: 楼市调控持续 银行限制信用卡房地产类消费

An announcement by Ping An Bank indicated that when a credit card was traded by domestic real estate merchants, the monthly transaction limit for RMB was adjusted from RMB 30,000 to RMB 10,000, and the cumulative limit for RMB 100 million per year remained unchanged. It is worth noting that the limit of 30,000 yuan is a quota announcement issued by Ping An Bank on September 27 last year. This announcement also states that it is not possible to conduct real estate transactions overseas.

Ping An Bank is not the only bank that currently imposes restrictions on the purchase of credit cards. On August 16 last year, the Credit Card Center of the Agricultural Bank of China issued an announcement to limit the amount of credit card purchases. The accumulated daily transaction amount of credit cards for real estate merchants must not exceed 50,000 yuan, and the cumulative monthly transaction amount must not exceed 100,000 yuan. It must not exceed 100,000 yuan, and the accumulated annual transaction amount shall not exceed 200,000 yuan. The transactions of credit card merchants in the real estate category shall not be applied for instalments or bills in installments.

On the same day, the Agricultural Bank of China also issued an announcement indicating that cash advances through ABC, including cash withdrawals, cash transfers, cash staging, etc., can only be used in the consumer sector and not in non-consumer fields such as production, operations, and investment. Including home purchases.

The CCB credit card center also announced in July last year that funds obtained through CCB's cash advance can only be used in the consumer sector, and should not be used in non-consumer fields such as home purchases.