CICC Research Department published "China's private lending analysis" report

CICC Research Department published "China's private lending analysis" report, the gold company said in the report, the balance of private lending in China is expected mid-2011, an increase of 38 percent to 3.8 trillion yuan, accounting for the total size of the shadow banking system China about 33%, equivalent to 7% of total bank loans. The report also details the private lending in recent years and changes. It is reported that China's private borrowing in 2008 before a modest year on year growth rate of about 10% in 2009 due to ample liquidity, the balance of private lending to stop growth, then 2 to 3 quarters or even a decline, but 2010 and 2011 a series of austerity policies in the first half again, to promote private lending market, year on year growth of approximately 50% and 40%.
    Mid-2011 the balance of private lending is estimated to reach 3.8 trillion yuan
    SME is not a serious breach of basic control bank risk
    Intensive media coverage of the recent civil usury strand breaks leading to finance for SMEs, business owners on foot case. The report notes that the overall situation of SMEs and non-compliance not reported as serious, but the future default rates may rise. According to information acquired after the survey, more than an event of default has occurred with excessive debt or get involved in speculation about the field, even in Wenzhou, problems of small and medium private enterprises account for only a certain percentage of all SMEs. Private loans for the impact on the banks of funds strand breaks, the report also made it clear that the breach of contract and private lending does not directly lead to increased non-performing loans of banks, but there are several indirect transmission channels. Second half of 2008, Zhejiang Province, once a city of the banking system appears non-performing loans increased from 0.9% to 2.5% of cases. If we assume that the emergence and future non-performing loans in 2008 a similar increase in small business banking non-performing loans is expected to increase 155 billion yuan. In fact, the banks since the mid-year, private lending has noticed the potential risks, and for the customer to troubleshoot. Thus, banks are implicated in the basic risk is controllable.
    Difficult to relax monetary policy measures will be introduced targeted
    While the central bank's credit control and supervision of the CBRC's sheet business pushing bank lending rates, and thus to promote private lending interest rates rose sharply, but researchers do not believe that regulators will relax monetary policy to ease the financial strain of the situation of SMEs. Expected, the CBRC targeted regulatory policy or fiscal policy will be able to more effectively solve the problem. For example, the small business loan risk weight from 100% to 75%, non-performing loan ratio of SMEs will be increased to 5% tolerance and so on. In addition, the CBRC is also considering small business loans are not included in the deposit-loan ratio assessment, or allow banks to issue financial bonds earmarked for small business loans. In addition, the report also said that regulators would not prohibit private lending, private lending agency but will fight the illegal acts of public deposits.