INDUSTRIAL Bank Co. has stopped lending to property developers owing to rising risk and tightened lending to real estate-related industries including steel and cement, Shanghai Securities News reported yesterday.

    Industrial Bank, which lists shares in Shanghai, issued a notice before the Chinese Lunar New Year to suspend mezzanine financing and supply-chain financing in the real estate sector until the end of March, according to the report, which cited an image of the notice circulated online. The Lunar New Year holiday began Jan. 31 this year. A press officer at Fuzhou-based Industrial Bank said yesterday he couldn’t immediately confirm the notice.

    The measures are temporary, an official of the bank was quoted by the Oriental Morning Post reported as saying in the report.

    Industrial Bank may also restrict funding to local governments that rely on less-regulated financing, according to Huang Jie, an analyst at China International Capital Corp.

    The move “is mainly attributable to falling risk appetite rather than regulatory guidance,” Huang wrote in a research note yesterday. “We do not rule out that it will likely tighten financing related to local governments in the future.”

    Lenders in China are trying to contain soured debt that threatens to dent profit growth as the world’s second-largest economy slows. Nonperforming bank loans have increased for nine quarters to the highest level since the 2008 global financial crisis, regulatory data show.

    Chinese banks had up to 200 billion yuan (US$33 billion) in mezzanine financing in 2013, accounting for 2 percent of the nation’s annual property investment, Huang estimated. Real estate mezzanine financing makes up 10 percent to 20 percent of annual property investment, with trust firms and private equity funds contributing the most, Huang said. (SD-Agencies)