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FINANCE

Banks Scale Back ‘Fake Equity’ Deals as Curbs Bite

By Wu Hongyuran and Dong Tongjian
Photo: IC
Photo: IC

(Beijing) – China’s financial regulators are notching more victories in their campaign to rein in financial leverage as lenders are forced to scale back opaque and risky lending practices.

China CITIC Bank Co., the country’s eighth-largest bank by assets, has suspended its business known as “fake equity real debt,” several employees told Caixin. This is a practice that involves disguising loans to risky borrowers, such as local government financing vehicles (LGFVs) and property developers, by making them appear as equity investments.

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