BEIJING, July 18 Chinese regulators will allow
more banks to issue asset-backed securities (ABS) in a bid to
activate credit to support the slowing economy, industry sources
Big banks will be allowed to issue ABS and a quota on such
issuance will be scrapped, said the sources, citing new rules
being formulated by the China Banking Regulatory Commission
(CBRC) and the China Securities Regulatory Commission (CSRC).
But the government will control the pace of the
securitisation programme to ward off possible risks, the sources
The recent interbank cash crunch underscored the central
bank's reluctance to pump more money into the economy and banks
have been told to better use existing credit through financial
innovations such as asset securitisation.
China Development Bank, a state-owned policy bank,
sold 10 billion yuan ($1.6 billion) of credit-backed securities
last September, re-launching a programme disrupted by the global
ABS gained notoriety during the global financial crisis for
the part they played in the U.S. subprime mortgage collapse, but
China's ABS products are much simpler and do not have the
complex derivatives that trashed the global financial system.
In May 2012, three related regulators issued a joint notice
reviving the ABS programme. The People's Bank of China, the CBRC
and the Ministry of Finance set an initial quota, allowing banks
to issue up to a combined 50 billion yuan in ABS.
($1 = 6.1353 Chinese yuan)
(Reporting by Shengnan Zhang and Kevin Yao; Editing by Robert