RPT-China to build credit assets trading centre -paper

BEIJING Dec 4 (Reuters) - China will set up a credit trading system in Shanghai to enable banks and other financial firms to buy and sell loans, the China Business News reported on Friday.

The China Foreign Exchange Trade System, an interbank funding centre for banks, insurers, securities brokers and fund management firms, has submitted a proposal to the State Council and is waiting approval, the paper said, citing a source close to the central bank.

Demand for a centralised credit trading system has risen this year as Chinese banks issue a record amount of loans. Banks frequently sell some of their loans to clear them off their books, which enables them to meet capital adequacy requirements or to make further loans.

New loans reached 8.9 trillion yuan ($1.3 trillion) in the first 10 months of this year, and the market expectation is for another 7-8 trillion yuan next year, as part of Beijing-led efforts to support Chinese economic growth.

The paper estimated that 800 billion yuan of credit assets changed hands in 2008 out of total new lending of 4.91 billion yuan that year.

It cited the source as saying the establishment of a credit trading centre would face no technical issues, but added that China needs new rules to govern the transaction process, clearance of collateral for the loans and taxation details.

But an unnamed bank officer cited by the paper said many institutions still might prefer to make private transactions that can be kept confidential. ($1=6.826 Yuan) (Reporting by Langi Chiang; Editing by Ken Wills) ((yan.jiang@thomsonreuters.com; +8610 6627 1207; Reuters Messaging: yan.jiang.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))