CBIRC Hits Banks with Penalties for Allowing Personal Loans to Enter Property Market

The banking regulator has issued multiple Chinese lenders with fines for allowing funds from personal loans to enter the property market in breach of regulations.

The China Banking and Insurance Regulatory Commission (CBIRC) issued 418 banking sector penalties in August involving 265 individuals and a total punitive sum of approximately 131.39 million yuan, according to a report from Securities Daily.

The big five state-owned banks incurred a total of 46 fines, while multiple banks received penalties for allowing funds from personal loans to enter the property market.

The Ningbo branch of China Construction Bank received a fine of 200,000 yuan for allowing personal loan funds to enter the stock and property markets, while Chongqing Rural Commercial bank (重庆农村商业银行) was hit with a fine of 500,000 yuan for channeling loan funds to real estate investments via a building company.

China CITIC Bank’s head office also received a fine of 800,000 yuan for severe breaches of prudential operating standards in relation to personal home mortgages and personal business loans.

Huang Zhilong (黄志龙), chair of the Suning Finance Macroeconomic Research Centre, said that funds from personal loans had continued to enter the property market in 2018 despite the imposition of strict scrutiny of lending conduct by regulators

According to Huang this indicates that the property market remains a source of comparatively high-quality assets amidst an “asset drought” in China, and that there is little likelihood of a relent in real estate controls in future.

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