BEIJING (AP) – Trying to allay investor fears, some Chinese banks are disclosing what they are owed by a real estate developer that owes $310 billion in debt and say they can withstand a potential default.
The announcement came after Evergrande Group promised to talk to some individual investors it owes money to. Other creditors were waiting to see if Beijing would step in to oversee a restructuring to prevent a financial disruption.
Evergrande’s difficulties in meeting government-imposed debt limits have caused fears that a default could hurt China’s economy or global financial markets. Credit rating agencies say a default is likely. Economists say China can prevent a credit crunch at home, but wants to avoid a bailout of Evergrande as it tries to force companies to reduce their debt levels.
One of Evergrande’s main creditors, Zheshang Bank Co, said the developer owes it 3.8 billion yuan ($588 million) and has “sufficient collateral.”
“The overall risk is controllable,” the bank said in a written response to questions on a portal run by the Shanghai Stock Exchange. It said “a risk situation … is not going to have a significant impact” on the bank.
Others, including Shanghai Pudong Development Bank Ltd. didn’t offer financial figures, but said its loans were small, tied to individual projects and secured with rights to land. Pudong Bank said it was in “close communication” with Evergrande.
Changshu Rural Commercial Bank Co. in eastern Jiangsu province said Evergrande owes it 3.9 million yuan ($600,000). The state’s biggest commercial banks, including Industrial and Commercial Bank of China Ltd, didn’t respond to questions.
Evergrande was caught off guard by tighter debt limits imposed last year by regulators seeking to curb rising debt levels that the ruling Communist Party fears could weigh down the economy, which is already in a long-term decline.