WRAPUP 3-Top China bank ICBC halts roll-over of some loans

* ICBC says lending pace has slowed at end of January

* Latest signal of tightening that may rein in growth

* Official newspaper says some banks have recalled loans

* Chinese regulator renews demand for even pace of lending

(Adds Liu Mingkang in paragraph 9)

By Zhou Xin and Simon Rabinovitch

BEIJING, Jan 27 (BestGrowthStock) – China’s largest bank, ICBC, said
on Wednesday it has stopped rolling over some loans to slow
credit growth after a surge at the start of the year, offering
the latest evidence of a government-directed clampdown on
lending.

In a statement issued after a week of reports and rumours of
China’s monetary tightening that have roiled global markets, the
world’s biggest lender by market value stressed that it would
not halt new lending.

But given that Chinese companies typically borrow for short
periods of as little as six months, and then roll the financing
over, Industrial and Commercial Bank of China’s move is
tantamount to calling loans in.

“ICBC will not rush to lend, nor will it stop lending,” the
bank said. “In the first 20 days of January this year, due to
concentrated capital demand from ongoing projects, the bank’s
credit offering was a bit fast but was still below that of the
same period last year,” it said.

“In the last 10 days of January, due to the expiry and
return of a concentrated volume of existing loans and repayment
of credit card debt, loan growth has eased,” it added.

World markets have been betting that China, the first major
economy to regain cruising speed after the global slump, will
lead economic recovery this year and reports of Beijing’s action
stoked fears that it may step too hard on the brakes.

Chinese banks extended 1.45 trillion yuan ($212 billion) in
new loans during the first 19 days of the year as they scrambled
to front-load lending before policy tightening shut the door on
them, local media have reported.

Chinese officials, however, have made clear that they do not
want to freeze lending, only to see banks lend more evenly to
avoid the kind of surge that now seems to be occurring.

“Banks must reasonably control new lending, manage the pace
well and try to achieve the even issuance and steady growth of
loans quarter by quarter,” Liu Mingkang, chairman of the China
Banking Regulatory Commission (CBRC), told a meeting, according
to a notice on the agency’s website.

To that end, regulators have ordered banks to call back some
of the loans they extended in January, the official Securities
Times reported.

Officials are targeting about 7.5 trillion yuan in new loans
this year, down from a record 9.6 trillion yuan in 2009.
However, that would still be the second-highest total ever and
more than enough to power the economy to 9.5 percent growth this
year, according to a Reuters poll.

But the lending curbs and steps by the central bank to mop
up some of the vast pool of cash sloshing about the banking
system have weighed on global investor sentiment, driving
Chinese stocks to a three-month low and also hitting overseas
markets.

CALLING IN LOANS

Commercial banks that had made large amounts of loans this
month were being instructed not only to halt new lending but
also to recall already-issued loans as soon as possible, the
Securities Times quoted an unnamed source as saying.

The report said the move means that the new loan total for
January will fall well below market expectations, despite a
burst of lending in the first three weeks of the year.

The newspaper did not provide details on how the loans would
be withdrawn. It gave the example of an unidentified bank in
Beijing that had lent 80 billion yuan this month, 60 billion
yuan above its quota, and was now working to call back all of
the excess funds.

The China Securities Journal, another official newspaper,
said local governments had borrowed 3.8 trillion yuan last year,
about 40 percent of all new loans in 2009, fuelling worries that
the loan explosion could leave a trail of bad debt in its wake.

The newspaper cited an unnamed source as saying that this
wave of borrowing underscored warnings by central bank governor
Zhou Xiaochuan about risks in the build-up of local government
debt.

The central bank raised overall bank reserve requirements on
Jan. 12, a move that went into effect on Jan. 18, and punished
some especially carefree lenders by imposing a reserve surcharge
on them, bankers said.

Many analysts expect the central bank to resume gradual
tightening following the Lunar New Year holidays in
mid-February, eventually leading to increases in benchmark
interest rates.
($1=6.826 Yuan)

Stock Investing

(Additional reporting by Aileen Wang; editing by Patrick
Graham)

WRAPUP 3-Top China bank ICBC halts roll-over of some loans