Evergrande’s Lenders Prepare Loan Loss Provisions and Rollovers

Several of China’s largest banks that issued loans to Evergrande are now reportedly considering taking on loan loss provisions and rolling over near-term obligations.

Agricultural Bank of China – the nation’s third-largest lender by assets – has made some loan loss provisions for Evergrande-related exposure, according to a report citing unnamed sources.

Separately, China Minsheng Banking Corp and China CITIC Bank Corp are prepared to roll over some of Evergrande’s near-term debt obligations.

According to the report, Chinese bank exposure to Evergrande has decreased in the past year, such as a 10 billion yuan ($1.55 billion) reduction of Evergrande loan exposure to 30 billion yuan at Minsheng.

There is a possibility that the government may intervene to manage an orderly collapse of Evergande, the report said, adding that regulators have completed related risk assessments.

In a leaked 2020 document, Evergrande was believed to have liabilities with over 128 banks and 121 non-banking institutions. Although the document was written off as a fabrication by Evergrande, it is reportedly viewed with credibility amongst analysts.