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China's Largest Bank Says Some Loans Not Rolled Over

Industrial and Commercial Bank of China, the country's largest bank, said it has stopped rolling over some loans to slow credit growth after a surge at the start of the year, though it will not halt new lending.

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The statement on Wednesday by ICBC was one of the most authoritative yet about a government-directed clampdown on lending in a week when reports and rumours of China's monetary tightening have roiled global markets.

Chinese companies typically borrow for short periods, such as six months, and then roll the financing over, making ICBC's decision not to renew loans tantamount to calling them in.

"ICBC will not rush to lend, nor will it stop lending," the bank said. "In the first 20 days of January this year, due to concentrated capital demand from ongoing projects, the bank's credit offering was a bit fast but was still below that of the same period last year," it said.

"In the last 10 days of January, due to the expiry and return of a concentrated volume of existing loans and repayment of credit card debt, loan growth has eased," it added.

Chinese banks extended 1.45 trillion yuan ($212 billion) in new loans during the first 19 days of the year as they scrambled to front-load lending before policy tightening shut the door on them, local media reported on Tuesday.

Chinese officials are targeting about 7.5 trillion yuan in new loans this year after a record 9.6 trillion yuan in 2009, and have repeatedly insisted that banks should spread their lending more evenly to avoid the kind of surge that now seems to be occurring.

Separately, the official Securities Times reported that Chinese regulators have ordered banks to call back some of the loans they extended in January, ratcheting up the pressure on banks to fall in line with official lending targets.

Commercial banks that had issued large amounts of loans this month were being instructed not only to halt new lending but also to recall already-issued loans as soon as possible, the newspaper quoted an unnamed source as saying.

The report said the move means that the new loan total for January will fall well below market expectations, despite a burst of lending in the first three weeks of the year.

The newspaper did not provide details on how the loans would be withdrawn. It gave the example of an unidentified bank in Beijing that had lent 80 billion yuan in January, 60 billion yuan above its quota, and was now working to call back all of the excess funds.