Foreign banks tighten lending rules for China state-backed firms
Some banks are adopting stricter lending criteria for China's state-owned enterprises (SOEs), demanding collateral from some companies they used to deem as safe as government debt, as Beijing tries to reform its bloated firms and the economy slows. Singapore's DBS Group, which recently suffered a loss on a bad loan to an SOE-related firm it had assessed as risk-free, plans to launch a "decision grid" to assess the creditworthiness of SOEs, according to draft internal risk guidelines reviewed by Reuters. A banker at Taiwan's Chang Hwa Commercial Bank said that from the beginning of this year his bank would only lend to state-owned Chinese companies that provide collateral, in recognition that SOEs were no longer risk free. Such changes in policy suggest some foreign banks are preparing for a rise in defaults in the world's second-largest economy, which is growing at its slowest pace in a quarter of a century and where the government is trying to mak...
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