21st Century Business Herald:
As Mr. Xiao mentioned, there are certain requirements regarding real estate loan concentration, which took effect on Jan. 1 this year. Do these requirements apply to existing loans and how much impact this would have on personal mortgage loans. Secondly, how is the reform work going in terms of the four major financial asset management companies and provincial rural credit unions? Thank you.
Xiao Yuanqi:
As I mentioned, a while ago, the CBIRC and the People's Bank of China jointly issued a notice on real estate loan concentration requirements for Chinese banks. We are not only supervising the bank's concentration ratio in the real estate industry, but also in businesses in all industries. There have long been concentration ratio regulations for industries, single enterprises and single groups. This concentration ratio is linked to the risk asset exposure and net capital. For example, we used to require that the concentration ratio for a single enterprise should not exceed 10% of the capital, the concentration ratio for a group should not exceed 15%, and that of an industry should not exceed 25%. Therefore, the real estate industry is no exception. The real estate industry has its own concentration ratio, and it should follow the unified requirements for concentration ratio supervision. Each real estate enterprise should also follow the unified requirements for concentration monitoring. In fact, the notice on real estate is not new, and there has been management of loan concentration in the past. So, in the future, we will act in accordance with the existing management regulations and the requirements of this notice, and continue to closely monitor financing from the banking industry to the real estate sector, in order to ensure that real estate fundraising is stable and orderly. This will have little effect on mortgage loans. Mortgage loans are highly fragmented in terms of both scale and scope. So the concentration requirements won't effect it much.
As for the reform of small and medium-sized banks, I've already given some explanations. The reform of asset management companies has been underway. All reforms must relate to each sector's main business. The main business for asset management companies is to dispose of and manage non-performing assets (NPAs) as well as put these assets to good use. All asset management companies must focus on these tasks. Other kinds of businesses must also serve this purpose, otherwise, they should be stopped. Asset management companies also need to improve their corporate governance, innovate their methods and tools, and create new markets. The direction of their reform and development remains unchanged. Thank you.
