China working on securitization of banks' credit assets

The People's Bank of China, the country's central bank, on Thursday issued the procedures for information disclosure of securitization of credit assets, showing the country is making an effort to transform banks' credit assets into securities.

Early this year, the Chinese government allowed the State Development Bank and China Construction Bank to make pilot reforms in this regard. The first securities are expected to be issued in the third quarter this year, according to sources.

The securitization of credit assets means selling banks' credit assets with low liquidity and expected revenues through issuing securities. In April this year, the People's Bank of China and the China Banking Regulatory Commission jointly promulgated the regulation on the experiment of securitization of credit asset.

The securitization of banks' credit property is of great importance to the Chinese banking sector under current circumstances, insiders said.

In recent years, China's booming real estate industry has attracted a tremendous amount of credit loans from commercial banks, causing huge risks for these banks as creditors.

The securitization of mortgage loans in the real estate market will help banks to reduce these risks, experts said.

Source: Xinhua