Chinese Bank Stocks Slide After PBOC Encourages Lending to Smaller Firms
Yicai Global | Xu Wei
DATE:  Dec 20 2018
/ SOURCE:  yicai

(Yicai Global) Dec. 20 -- Stocks in Chinese mainland banks fell this morning after the People's Bank of China unveiled a new monetary tool to encourage lending to smaller businesses and private firms, suggesting investor concerns over the potentially increased risk of lending.

The banking sector as a whole was down 1.76 percent as of 10.39 a.m. The biggest loser was Bank of Ningbo [SHE:002142], which fell 3.44 percent to CNY15.72 (USD2.27), followed by China Merchants Bank's [SHA:600036] 3.29 percent decline to CNY25.89.

China's big four state-owned banks, Industrial and Commercial Bank of China [SHA:601398], China Construction Bank [SHA:601939], Bank of China [SHA:601988] and Agricultural Bank of China [SHA:601288], all fell between 1.1 percent and 2.2 percent.

The central bank began taking applications yesterday for a new monetary tool, known as the targeted medium-term lending facility, from qualified banks looking to obtain stable, long-term funding to support their business units working with small and private companies.

Large commercial, joint-stock and commercial banks in major cities that lend heavily to the real economy and meet macro-prudent requirements can apply for the TMLF, which has a maximum term of three years at an annual interest rate of 3.15 percent, 15 basis points lower than the existing medium-term lending facility.

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