Bank Sees 93% Of Local Loans Covered

CHINA Construction Bank yesterday said 93 percent of its local-government loans were covered by cash flow at the end of June as it sought to curb concern that the nation's US$2.7 trillion credit boom will drive up bad debts. The percentage of loans "fully or basically" covered rose from 79.3 percent at the end of December, Guo Shuqing, chairman of China's second-biggest bank, said in Beijing yesterday. Provisions for these loans stood at 325 percent, said Huang Zhiling, chief risk officer. About 50 billion yuan (US$7.8 billion) in loans to localgovernment financing vehicles, or less than 10 percent of the total, are due to be repaid by the end of this year, said Chen Zuofu, an executive vice president.

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