July 4, 2019 / 8:40 AM / 4 months ago

CORRECTED-UPDATE 2-China's June new loans dip but regulator says lending demand met

(Corrects comparative month to May, from April in 3rd paragraph)

* China’s June yuan loans fall from May - calculations show

* Regulator says H1 new loans more than 9 trln yuan

* Says has ample weapons to prevent financial risks

By Cheng Leng and Kevin Yao

BEIJING, July 4 (Reuters) - Chinese banks extended less in new yuan loans in June, according to a Reuters calculation based on official data, but regulators assured that credit needs of the broader economy were met.

Banks lent out more than 9 trillion yuan ($1.31 trillion) in new local-currency loans in the first half, Zhou Liang, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC), told a media briefing on Thursday.

That meant banks doled out more than 990 billion yuan ($144 billion) in new loans in June, according to calculations, down from May.

Chinese banks extended 1.18 trillion yuan in net new yuan loans in May, bringing total new loans in the first five months to 8.01 trillion yuan, data released by the People’s Bank of China on June 12 showed.

The PBOC is due to issue June lending data later this month.

The banking regulator did not give any reasons for the monthly drop in loans, but emphasised the government’s push to support the financing needs of the real economy.

“We fully mobilised the bank credit, equity and insurance capital to ensure the financing needs of the real economy in the first half of 2019,” said Zhou. “In particular, we met with the funding needs of manufacturing and consumers wanting to upgrade.”

Another regulatory official Yang Liping said outstanding loans to manufacturers had reached 17.53 trillion yuan by end-March, and China would keep guiding big banks to make long-term loans to manufacturers and enhance services for such firms.

China has ample weapons to prevent financial risks, Zhou said, addressing concerns about debt contagion after markets were jolted recently by the government’s takeover of Inner Mongolia-based Baoshang Bank due to credit risks.

When asked about the impact of Baoshang’s troubles on the financing front, Xiao Yuanqi, CBIRC’s chief risk management officer said the bank’s business operations were back to normal.

“...risks surrounding the short-term liquidity crunch of some smaller financial institutions have been resolved, and the market operates very smoothly at present.”

Liang Tao, another vice chairman of the CBIRC, told the same briefing that more than 1 trillion yuan worth of assets of China’s Anbang Insurance Group Co had been disposed or were under disposal.

The regulator will also reduce the portion of Anbang’s risky short-term insurance products under 15% of its total insurance products by 2019.

The Chinese government took control of Anbang in February last year, part of a sweeping campaign to reduce financial risk. The former chairman of Anbang, Wu Xiaohui, was later sentenced to 18 years in prison by a Chinese court.

China has formed a new company called Dajia Insurance Group to take over the assets of Anbang, according to sources familiar with the matter and a government document.

$1 = 6.8731 Chinese yuan Reporting by Cheng Leng, Kevin Yao in BEIJING and Beijing Monitoring Desk, Editing by Jacqueline Wong

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