Chinese regulators ask large banks to step up support for Vanke, sources say

Chinese regulators recently met financial institutions to discuss state-backed property developer China Vanke where they asked large banks to enhance financing support and asked private debt holders to discuss maturity extension, two sources said.

The sources with direct knowledge of the matter said the financial institutions were asked to make progress quickly, and that the State Council – China’s cabinet – is coordinating efforts related to supporting China Vanke.

Vanke declined to comment.

The National Administration of Financial Regulation and the State Council Information Office, which handles media queries for the council, did not respond to requests for comment.

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Investors have dumped shares and bonds of Vanke over the past few weeks on liquidity concern, amid reports that the developer, previously seen by the market as financially sound, was seeking debt maturity extension with some insurers.

Some large national commercial banks had previously made repayment requirements stricter for Vanke, adding to the developer’s financial stress, said another person with knowledge of the matter.

Total new bank loans issued to Vanke in the fourth quarter of last year slumped by more than half compared to the same period a year ago, the source said.

“Banks to ensure [Vanke’s] financing; insurers to extend maturities for private debt; to guarantee the repayments of public bonds,” said one of the sources.

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A separate source said last week that insurers including Taikang Insurance, state-owned PICC Property and Casualty and New China Life Insurance, have received requests from Vanke for debt extensions.

Concern about Vanke’s financial health comes after a string of defaults by developers, including giants China Evergrande Group and Country Garden, since the country’s property sector slipped into a debt crisis in 2021.

Any repayment troubles at Vanke, one of the few remaining Chinese developers with investment-grade credit ratings, could further dampen market confidence, analysts have said.

Vanke said in a filing on Friday that it has deposited funds required to repay US$630 million US dollar notes due on Monday.