SHANGHAI, June 16 China's Ping An Bank Co Ltd
will become the first Chinese company to issue
asset-backed securities on a mainland exchange, a major step
forward in official efforts to make bank assets more liquid so
that loans can be made without increasing money supply.
Market sources have told Reuters that regulators plan to
grant quotas totalling 300 to 400 billion yuan for firms to sell
asset-backed securities (ABS) in coming years as a tool to shift
risk away from the banking system, reducing the chances of a
financial crisis as economic growth slows and bad loans
Ping An Bank, a medium-sized Shenzhen-based lender, will
soon issue 2.63 billion yuan ($424 million) worth of securities
backed by small loans to consumers which will be then listed on
the Shanghai Stock Exchange.
"The issue signals that ABS will come to the Shanghai Stock
Exchange for the first time and that the expansion of a
programme to expand our country's asset securitisation has made
major progress," the exchange said in the statement late on
Asset-back securities have previously been limited to the
interbank market in China and were only traded by major
institutional investors. This new move will expand ABS trading
to smaller institutions such as brokerages and mutual funds, as
well as to retail investors.
"This will expand the product's investment groups, disperse
banking system risk and simultaneously improve liquidity in the
secondary market," the bourse said.
China's M2 broad money supply has expanded to a whopping 117
trillion yuan, five times than that of 10 years ago, fuelling
worries that rapid money growth could fan consumer inflation and
push up already-frothy property prices.
($1 = 6.21 Yuan)
(Reporting by Lu Jianxin and Pete Sweeney; Editing by Edwina