The China Banking Regulatory Commission has quietly told banks that they should pressure property developers to offload housing inventory faster in a bid to avoid souring loans, Bloomberg reported, citing an unnamed source. The commission told banks they should take more collateral from developers receiving loans, or instruct them to sell off assets if they expect to have problems repaying loans within the next year. It cautioned that some developers may run into difficulties due to overleveraging, a wave of maturing loans and a shortage of financing. The regulator’s warning comes after many analysts have warned in recent months that developers could face a liquidity squeeze this year. “We can’t rule out the possibility that very small developers may get into trouble if policy becomes unexpectedly tight, but regional bellwethers and listed companies should be OK,” said Dai Fang, an analyst at Zheshang Securities.
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