The threat to small banks in Jiangsu, Zhejiang and elsewhere is so great that they may need protection from local authorities as their bad loans go through the roof, he said.Ĭhina Evergrande’s interim report noted that China Zheshang Bank in Zhejiang, Huishang Bank in Anhui, Bank of Luoyang in Henan were among its principal settlement and transaction banks. Liu says his back-of-the-envelope calculation, based on project costs and sales figures in Evergrande’s financial reports, indicate that in Jiangsu alone it would take as much as 40 billion yuan ($6.3 billion) to resuscitate dormant property projects. Jiangsu Needs 40bn Yuan to resuscitate China Evergrande Projects “They may need to plough their own funds into projects, compensate homebuyers and help banks.” “If cadres in Jiangsu and Zhejiang fail to get hold of funds or accounts before Guangdong, they may be left to pay for any shortfalls from their own coffers,” said Liu Xiaobo, a financial commentator and blogger in Shenzhen. Provincial officials fear that fury among the thousands of people who have sunk their life savings into buying unfinished Evergrande apartments may trigger social unrest. The scrum underscores how much is at stake for local governments as China Evergrande teeters on the brink of bankruptcy with more than $300 billion of debt after Fitch Ratings declared it in default on December 9 for failing to make bond coupon payments of $82.5 million. Since news broke December 3 of Guangdong province’s de facto takeover of the ailing property giant, headquartered in its capital Guangzhou, Jiangsu and Zhejiang on the east coast and Hainan island in the south are among provinces rushing to seize the company’s local assets before Guangdong beats them to it. These days it’s creating frenzies of a different kind as provincial governments battle for control of the troubled developer’s remaining assets. In China Evergrande Group’s heyday, the launch for sale of its new apartments often triggered frenzies as throngs of people battled to snap up the best units.
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