CCB plans expanding loan plan to two more cities

China Construction Bank Corp is planning to expand its Contractual Saving for Housing institution to another two Chinese cities, the State-owned bank's president Wang Hongzhang said on Thursday.

Wang was speaking at the 10-year anniversary of the establishment of Sino-German Bausparkasse, a joint venture between CCB and Bausparkasse Schwabisch Hall AG, Germany's largest Contractual Saving for Housing institution.

He declined to identify the two cities. Sino-German Bausparkasse was founded in Tianjin in 2004, before it expanded to Chongqing in 2011.

Contractual Saving for Housing is an established form of loan to homebuyers in Germany and a few other European nations. Homebuyers can get low cost, fixed interest rate of housing loan as long as they deposit in the bank over a period and accumulate about a half of the loan.

However, 10 years after the form was introduced into China, it is still a minor part of the total housing loan, while commercial mortgage loan takes the dominant role. In Germany, Contractual Saving for Housing accounted for a third of the market.

In Tianjin, Sino-German Bausparkasse issued an aggregate of 40 billion yuan ($6.51 billion) in the past 10 years, while benefited 110,000 residents.

Wang called for China's banking regulators to adopt more measures to accelerate the expansion of this form of loan nationwide, which include much more financial inventive to encourage households to take part in contractual saving for housing, lower reserve requirement ratio for this kind of bank, and specified law and regulations.