SHANGHAI, Sept 27 Citic Securities said it plans
to sell some primary properties to raise at least 5 billion yuan
($817 million) to consolidate its capital base in China's first
real estate securitisation.
In a statement published on Friday in the official Shanghai
Securities News, China's largest brokerage
said there will be a three-step securitisation process.
The company will first transfer rights for two buildings in
Beijing and Shenzhen and rights to related land parcels from two
units in Tianjin. Then it will sell all stakes in its Tianjin
units to its fund unit, Citic Jinshi Fund Management Co, for at
least 5 billion yuan, according to the statement.
The brokerage will then rent offices in the buildings to
operate, it said, adding that the plan will be submitted to
shareholders for approval.
Citic Securities said that if the securitisation succeeds,
it stands to get stable income from the fund unit, which will
launch a private equity fund for "special innovative financial
businesses". The brokerage gave no details.
China's State Council, or cabinet, said in late August that
the country would expand a pilot programme to let companies
securitise assets. The central bank also announced details on
the reform to let firms, in particular financial institutions
including banks, sell asset-backed securities (ABS).
Agricultural Development Bank of China, one of China's three
policy banks which lend in line with government decrees,
completed its first-ever sale of ABS on Wednesday.
Only about 32 billion yuan in securitised products were
outstanding in China at the end of June, according to Reuters
calculations based on data from three Chinese securities
That compares with more than 56 trillion yuan in commercial
bank loans, 27 trillion yuan in bonds, and 4.2 trillion yuan in
trust loans that are often packaged into wealth management
Official moves to scale up securitisation come as the
government has shifted its focus to optimise existing assets as
part of efforts to improve the structure of the world's
second-largest economy and cut reliance on state investment.
China's broad M2 money supply exceeded 100 trillion yuan for
the first time in March and reached 106 trillion yuan by the end
of August, causing widespread worries over excessive supply that
could fan inflation, asset bubbles and over-investment.
($1 = 6.12 yuan)
(Reporting by Lu Jianxin and Pete Sweeney)