Concerns over real estate trust risks dismissed

Potential risks in certain projects invested by real estate investment trusts are not likely to cause system-wide troubles for the broader industry due to their limited size, according to an official from China Banking Regulatory Commission (CBRC).

Speaking at a forum on Thursday, Ke Kasheng, head of the non-bank financial institution under the CBRC, dismissed concerns over possible risks in the trust industry following the exposure of risks in some real estate projects earlier this year.

According to Ke, the property trusts' financing only accounts for 6.1 percent of the total banking industry's funding for the real estate sector and 12.6 percent of the entrusted assets of Chinese trust companies.

The relatively small size of the financing means it will not have a substantive influence on the property sector or the trust industry, he said.

Property trusts' projects are handled independently and risks found in single cases will not spread to other projects, Ke said, adding that the CBRC's strict regulation of the sector has helped to rein in risks.

Outstanding real estate trusts reached 695.3 billion yuan (110.4 billion U.S. dollars) as of the end of June, Ke said, adding that the redemption of trusts will reach 71 billion yuan this year and 184.2 billion yuan in 2013.