Banks Need To Turn To Syndicated Loans

BANKS in Shanghai are required to turn to syndicated loans to fund projects of more than 1 billion yuan (US$146 million) each to trim risks, the local regulator said yesterday.

"Banks are required to proactively turn to syndicated loans to (fund) key investment projects," the Shanghai Bureau of the China Banking Regulatory Commission said yesterday.

Banks should prioritize syndicated loans for any single project of more than 1 billion yuan as a syndicate can help cut risks.

Banks are banned from issuing syndicated loans to finance high-pollution projects or to industries suffering from overcapacity.

The local banking regulator is also pushing forward a platform for syndicated loan transactions.

The CBRC is also encouraging the growth of syndicated loans to reduce risks. Authorities have asked banks to offer syndicated loans if a single client's total credit need is more than 15 percent of the bank's capital or if a single credit project is more than 10 percent of the bank's capital.

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