China state-owned commercial banks tighten auto lending policies - report
Monday, July 12, 2004 6:26:22 AM
afxpress.com
BEIJING (AFX-ASIA) - China's four largest state-owned commercial banks are tightening their auto lending policies in the face of rising loan defaults, the China Daily reported citing unidentified banking sources
The paper said some of the banks have increased their loan down payment requirements to as high as 50 from 20 pct and shortened the loan terms to three years from five years
In addition, some banks have introduced stricter guarantee requirements, securing the loan against other properties apart from the car itself
"The credibility of many borrowers was just terrible and the lack of an effective credit system has left us vulnerable. We simply had to raise the threshold," an unidentified senior auto loan manager at one of the four major commercial banks was quoted as saying. Fierce competition in the auto sector has forced car makers to aggressively slash prices this year, which has contributed to an increase in loan defaults, the paper said without elaborating
China's inadequate car registration system and the absence of a personal credit record system makes it difficult for banks to vet customers and to recover vehicles in the event of a loan default, the bank official said
"Banks lack necessary legal protection. Most of the time we are not able to retrieve autos (in the event of a loan default)," the official said
The Agricultural Bank of China is planning to launch inspections of auto loans at provincial level after the banking regulator discovered "nonstandard" lending practices at some of its branches, the paper said
At the end of May, it had 46.3 bln yuan in outstanding auto loans, which accounted for 31 pct of total outstanding auto loans of the four major commercial banks, and a non-performing auto loan ratio of 3.32 pct, the paper added
fxstreet.com
================================================
Wondering what is the non-performing auto loan in the US?
The auto inventory in China increased 28 percent in May, possibly will be the same in June. The hefty profit for GM, etc. is coming to an end<g> |
