China has reopened the gate on loan-backed securities, after suspending a trial in the aftermath of the global financial crisis.
China's central bank, the People's Bank of China, has authorized a 50 billion yuan ($7.85 billion) quota for the country's lenders to securitize their loans. Lenders are required to submit securitization plans for regulatory approval. The quota is expected to be fulfilled by year-end and more quotas are likely to be authorized in the future.
China's loan-backed securities trial started before the 2008 global financial crisis. However, the trial was suspended after financial derivatives such as asset-backed securities were seen as the culprit of the crisis.
The country first launched a trial in 2005, when China Development Bank issued bonds based on 51 loans totaling 4.7 billion yuan.
The quota is a pittance compared with the banks' total assets, which were at 120 trillion yuan at the end of the first quarter, but it opens a new path for lenders to get rid of non-performing loans and liquidate assets.
gaochangxin@chinadaily.com.cn
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263 Registration Number: 130349 
