Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Green Oasis Environmental, Inc. (GRNO) -- Ignore unavailable to you. Want to Upgrade?

To: Charles A. King who wrote (9989)	10/26/1998 2:49:00 AM
From: flickerful	Respond to of 13091

Beijing warns on foreign loans ft/26 oct 98 Creditors of bankrupt financial companies may lose out write James Harding and James Kynge in Beijing China's finance minister has warned foreign banks not to expect the Beijing government to bail them out of their loans to bankrupt Chinese financial companies. The warning from Xiang Huaicheng, in an interview with the Financial Times, will come as a shock to foreign bankers and could affect the country's overall credit standing. When China's central bank closed down Guangdong International Trust and Investment early this month, it said obligations to international creditors would be made a priority as long as loans were accompanied by the appropriate official documentation. Foreign banks had lent Gitic and other Chinese investment companies more than $10bn. In the first public comments by a senior official since the Gitic collapse, Mr Xiang said other investment companies, known as Itics, which have mushroomed across China in recent years, were likely to be closed. But he insisted Beijing would not act as guarantor of last resort on foreign loans. "I would not say that all the Itics in China will eventually fail in the way that Gitic did, but I will say that in various provinces the problem does exist. It is unlikely that all these Itics across China will fail or collapse at one time. But, I am sure, the central bank will settle accounts with these Itics one by one," he said. Aside from Gitic, two Itics have defaulted on loans this month. In addition, over the weekend, the head of the Shenzhen International Trust and Investment Corporation said his company had run into difficulty raising funds. Mr Xiang said: "Local government does not have the qualification or the resources to guarantee these loans. I say to governors of the provinces, I do not even dare to provide these guarantees, so how dare you? And the governors say that [they] did not do it, it was the mayors who did it. "Then I just say, the foreign bankers themselves should look really carefully at these loans." When China's central bank shut down Gitic, owned by the provincial government of southern China's Guangdong province, it appointed Bank of China, one of the country's big four commercial banks, to act as administrator of the company's closure. But, according to a senior official involved in the process, the Bank of China's responsibility covered only the registration of Gitic's liabilities and assets. It would not provide funds to honour obligations to international creditors, which would have to seek redress from the Guangdong provincial government. In the long-run, the closure of Gitic could improve the health of China's financial system by sending a signal to other Itics to end corruption and ineptitude, said the official. "But in the short-term, there are negative effects. "I already detect a certain credit crunch by foreign banks not just to these investment companies but also to the listed companies, the window companies in Hong Kong. "Foreign banks have been pulling back credit lines and cut off their lending. Funding costs have increased for China," the official said.