 Chinas Banks No-loss With 50% Housing Price Drop?
Follow us on TWITTER twitter.com Like us on FACEBOOK www.facebook.com A usual buying peak of September and October did not take place in 2011, as expected by Chinas property market. On the contrary, a tidal wave of price cuts has spread from first tier cities like Beijing and Shanghai to the second and third tier cities. It is commonly believed that the downturn of Chinas property market has arrived, the bubble has begun to burst. Former chairman of China Banking Regulatory Commission CBRC, Liu Mingkang, at recently held Caixin summit, claimed again that 50% reduction of housing prices would still keep Chinas bank from suffering losses. Experts say that, regardless of price ups and downs, the ultimate victims are civilians. After months of tentative small scale price-cuts, many real estate projects in Shanghai, Chongqing, Hangzhou and other cities have launched great markdown promotions. Ex-Chairman of China Banking Regulatory Commission, Liu Mingkang reiterated at the Caixin Summit, opened on November 11, that even if house prices fall by 50%, banking risk is still controllable. Liu claimed that Chinas current real estate bank loans were over 10 trillion. Stress test results of the China Banking Regulatory Commission showed that when housing prices fall by 40%, the banks provision coverage ratio would remain 110%. In the worst case scenario that prices fall by 50%, the coverage ratio could still reach 100%. That is, ...
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