CHINA’S biggest banks have lent 1.3 trillion yuan (US$209.4 billion) to the country’s State-backed margin lender to halt a meltdown in Chinese shares, domestic media said Friday, underlining the government’s determination to support stock prices.

    Financial magazine Caijing cited unnamed sources as saying that 17 commercial domestic banks had coughed up the cash for China Securities Finance Corp. as of last Monday after China’s central bank said it wanted to extend funding to the firm.

    China Merchants Bank Co. was the biggest financier, lending 186 billion yuan to China Securities Finance, the magazine said.

    China Securities Finance is the only institution that provides margin financing loan services to Chinese securities firms and is seen as an important conduit for the government to counter stock market volatility.

    Spooked partly by speculation that the central bank was about to end its monetary policy easing, China’s stock market plunged in the past month by nearly a third at the peak of its selloff, wiping out around US$4 trillion.

    The collapse in stock prices sparked China’s biggest rescue effort of its equity market, with the government launching a series of moves that included halting initial public offers and banning firms and their executives from selling shares.

    China isn’t the only market with a history of intervention. The U.S. Securities and Exchange Commission temporarily banned short selling of some stocks during the global financial crisis seven years ago.

    U.S. Congress authorized US$700 billion for the TARP program in 2008 to help re-capitalize the U.S. banking system. It also granted the U.S. Government power to take over mortgage-finance firms Fannie Mae and Freddie Mac, an authority that then U.S. Treasury Secretary Henry Paulson equated to having a “bazooka.” (SD-Agencies)