World Real Estate

Chinese developers invest in banks

Real estate property market news:

A Beijing apartment complex developed by Vanke.

A Beijing apartment complex developed by VankePhoto: Bloomberg

Property developers in China are buying stakes in banks sparking fears that the already heavily indebted companies are attempted to gain preferential treatment, reports The Financial Times.

Around RMB18.4 billion ($3.2 billion) has been invested in banks from China’s property sector, according to the Financial News, an official China central bank newspaper.

The paper warned developers last month to not expect special treatment from banks.

“Whether from the perspective of the banks or regulators, as soon as a property company becomes a bank’s shareholder, their business dealings will become related-party transactions, and so will be controlled and supervised more closely,” the newspaper said.

Vanke, Evergrande and Tian Tai have purchased minority shareholdings in local Chinese banks.

“We don’t think they [the developers] expect to get funding from the banks directly, but they will be looking for opportunities for mortgage financing for their clients or financing for their contractors,” Kaven Tsang of Moody’s told the FT.

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