Bank of China to Offer at Least 500 Billion Yuan of New Loans

March 6 (Bloomberg) -- Bank of China Ltd., the nation’s third-largest by value, will offer at least 500 billion yuan ($73 billion) in new loans in 2009, boosting credit along with other banks after the government directed them to support the economy.

Chinese Premier Wen Jiabao set a new loan growth target of 5 trillion yuan for 2009 this week as he prods banks to help support a 4 trillion-yuan stimulus package. Collapsing exports have dragged the world’s third-largest economy to its weakest growth in seven years and cost the jobs of about 20 million migrant workers.

Domestic lenders offered a record 1.62 trillion yuan in new advances in January, more than double the previous all-time high set a year earlier, according to central bank data. Bank of China Chairman Xiao Gang said the company needs to balance the increase in loans with the need to avoid another episode of the bad-debt accumulation that prompted a decade-long bailout of banks.

“We want to share at least 10 percent of the nation’s lending target,” said in an interview in Beijing today. “But we won’t loosen the lending standards. We just can’t go back to the old path or receive any more government bailout.”

New lending in February exceeded 800 billion yuan, more than triple the amount extended a year ago, Liu Mingkang, chairman of the China Banking Regulatory Commission, said yesterday.

Xiao also said the bank has no plans to raise its stake in Bank of East Asia Ltd. or bid for any assets belonging to U.S. insurer American International Group Inc.

Hiring Spree

Xiao also said shareholder Temasek Holdings Pte, Singapore’s $130 billion state-owned investment company, had agreed not to sell its stake in Bank of China until at least June 30. Temasek owns 10.48 billion Hong Kong-listed shares, or 4.1 percent in the lender.

Royal Bank of Scotland Plc, the biggest government- controlled bank in U.K., in January sold its entire stake in Bank of China for $2.3 billion to replenish capital depleted by writedowns.

Bank of China is planning to add about 10,000 new employees in 2009, Xiao said, bucking the global financial meltdown that has cost more than 280,000 jobs worldwide so far. The new hires will mainly be college graduates, he said. Bank of China had 237,379 employees at the end of 2007.

China dropped lending quotas and unveiled the stimulus package in November to maintain economic growth and counter the global financial crisis.

The surge in credit has prompted the central bank and the banking regulator to survey lenders for details on the recipients and terms of the loans, in part to ensure that lending isn’t funneled into the stock market, a person with knowledge of the matter said last month.

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