The China Banking Regulatory Commission has banned banks from selling loans to trust companies, removing a vehicle used by banks for temporarily removing loans from their balance sheets, the Wall Street Journal reported. The ban was announced on December 24 in a notice to banks that was not made public. The practice of selling loans temporarily to trust companies with promises to buy them back any time between a few weeks and a few years later had allowed banks to report lower loan totals, but ratings agency Fitch late last year noted in a report that it was unclear whether doing so actually reduced banks’ exposure to the loans. The new regulation comes as part of a wider effort to rein in lending growth; however, state media reported yesterday that banks may have lent out as much as US$87.8 billion in new loans in the first week of 2010.