CBRC orders banks to account for $340b in loans

The China Banking Regulatory Commission (CBRC) has told China’s commercial banks that they must account for US$340 billion in off-balance-sheet loans, the Financial Times reported. Lenders have been using a process of "informal securitization" to mask their exposure to loans and evade regulatory requirements. Under the process, trust companies repackaged bank loans and sold them on to companies, or gave them to banks for sale to customers. The CBRC said that all such loans must be put back on banks’ books. Including these loans, total new lending in China in the first half reached US$871 billion, 30% above the official lending figure of US$679 billion. Ratings agency Fitch has repeatedly warned of the risk of off-balance-sheet loans, noting that they obscure banks’ true exposure.