Industrial Bank curbs certain property loans

Industrial Bank, a major joint-stock commercial bank in the country, has ordered its local branches to suspend certain types of property-related loans, the bank said Monday.

"To optimize lending strategy, the bank will halt its property-related mezzanine financing service and suspend extension of some property loans until new policies are issued by the end of March," read a filing by the bank to the Shanghai Stock Exchange late Monday.

Mezzanine financing accounts for a tiny portion of bank business, the filing said, and its suspension would exert little impact on operations.

Mezzanine financing is primarily debt capital that entitles the lender rights to convert to an ownership or equity interest in the company if the borrower cannot pay back in full.

China's four biggest State-owned banks, as well as other commercial banks, did not follow suit and kept their property loan policies unchanged, Shanghai-based Oriental Morning Post reported Monday.

Bank of Communications, China's fifth-largest lender by assets, refuted market talk that it had issued a notice to suspend all property-related loans on Friday, news portal sina.com reported Monday.

Analysts said the move by Fuzhou-based Industrial Bank indicated a perception of rising risk in the real estate sector.

Gao Jianping, chairman of Industrial Bank Co, was quoted by the Oriental Morning Post as saying slowing economic growth, growing asset bubbles and tight credit conditions have made risk control a priority at an internal meeting held before the Spring Festival holidays.