Private firms get more support

Commercial lenders reiterate commitment to increase financing for the sector 

Top financial institutions have responded proactively to President Xi Jinping's call for more steps to address the financing woes of private firms and reiterated their commitment and support for the same.

State-owned lender Bank of China Ltd was one of the first off the block after it unveiled a slew of measures on Friday to support private enterprises with the aim of stabilizing China's foreign trade and domestic investment.

The country's fourth largest commercial lender by assets announced 20 measures including optimizing its credit granting policy, reducing the cost of service, expanding the scope of collateral, and offering non-collateral loans to high-quality private firms based on their credit record.

Bank of China will also improve performance evaluations so that its loan officers will not be held responsible for defaults on loans to small businesses if they have done the due diligence, said Pan Yuehan, chief risk officer at BOC.
The bank's latest move came two days after China's top banking and insurance regulator announced three new targets for banks regarding offering loans to private firms.

"According to preliminary considerations of the regulator, banks should achieve three targets: For large banks, their loans to private firms should account for no less than one third of their new corporate loans. For small and medium-sized banks, the proportion should be no less than two thirds.

Banking institutions altogether should try to attain the goal of granting no less than 50 percent of their total new corporate loans to private firms in three years," said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, in an interview with the Beijing-based Financial News on Wednesday.

Since the beginning of this year, financial regulators have continuously stepped up efforts to stabilize financing channels, market confidence and expectations. At the end of September, loans offered by banking institutions to private enterprises accounted for nearly one fourth of total loans, said Guo.

Wang Jianfeng, chairman of Joyson Holding Co, a Ningbo-based private firm committed to the research, development and manufacturing of automotive components and automotive electronics, said he hopes that banks will at least keep their size of lending to private companies at the current level.

"I also hope that large State-owned commercial banks will explore ways to further support companies, which are competitive and concentrate on their main business, for joining global competition," said Wang.

More than 100 private firms across China including Joyson Holding signed agreements of cooperation with BOC on Friday.

The People's Bank of China, the central bank, also said it will use monetary policy to incentivize financial institutions to increase support for private companies. At a symposium jointly held by the PBOC and financial regulators in Beijing on Friday, 10 banks and security firms proposed an initiative to support the financing of private companies through multiple channels.