China plans pilot securitisation program: Dechert

China is planning a new pilot securitisation program to allow some commercial lenders to securitise financial assets, an update from the law firm Dechert has reported.

It is reported that the program will involve up to $7.9 billion of securitised assets, with eligible assets to include loans to local Chinese government financing vehicles. The pilot program transactions will likely trade over-the-counter in China’s interbank bond market.

Jin Qi, assistant governor of the People’s Bank of China said: “Based on the results of the pilot securitisation program, we would gradually promote asset securitisation.”

According to Dechert, a vice governor of the People’s Bank of China has said that bank securitisation of loans in necessary for the financial sector, and suggested that securitisation would permit Chinese banks to set aside less capital for loan provisions.

Dechert reports that concerns have been raised by officials of the China Banking Regulatory Commission that banks may try to mix debt with good to be securitised, and specific guidelines have been called for.

Click here to read the full update:[asset_library_tag 5177, Securitisation in China]

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