Bank Of China Taking Steps To Rein In Loans

[Purveyor]

BEIJING (Dow Jones)--As China signaled a further tightening of controls on lending growth, one of the country's big banks said it was taking steps to rein in loans.

Bank Of China Ltd. has ordered its credit officials to stop making new yuan loans due to overly fast lending growth so far in January, a person familiar with the situation said Wednesday.

An official at another bank said that in a meeting with the central bank earlier Wednesday, industry officials were informed that some small- to medium-sized stockholding commercial banks were being told to raise the amount of reserves they hold at the central bank, as part of efforts to curb lending growth.

For these banks, the move comes on top the central bank's 0.5 percentage point hike Monday in the reserve requirement ratio for most lenders. Officials at a number of banks reached by Dow Jones Newswires couldn't immediately confirm the news.

Fears that China might further tighten lending as part of efforts to keep its economy from overheating sent Shanghai's main stock index down 2.9% Wednesday, with large declines in banking stocks, and also kept a lid on gains in markets elsewhere in Asia. It was cited by traders as hurting currencies linked to an appetite for risk, such as the Australian and New Zealand dollars.

With China serving as one of the main engines pulling the global economy out of recession, any move to slow its momentum could have repercussions around the world.

http://online.wsj.com/article/BT-CO-20100120-718828.html?mod=WSJ_latestheadlines

[yava]

1. Finally, its about time if not too late....

to avoid the burst of their bubble, especially in the housing/office market.
But is it too late, too little?
This will play out for end of 2010.