Exclusive: China c.bank withdraws 20 bln yuan from state lenders
China's central bank has withdrawn at least 20 billion yuan ($3 billion) from some state-owned lenders via designated central bank bills, banking sources told Reuters on Friday.
State banks, including Industrial and Commercial Bank of China <1398.HK>, China Construction Bank Corp <0939.HK> and Agricultural Bank of China Ltd <1288.HK>, were required to buy the bills that were issued for them, the sources said.
The move is a small punishment for the lenders who don't toe the central bank line carefully enough, an interbank market bond trader, who declined to be named, told Reuters.
But he added that the size of the operation was too small to have a real impact on overall interbank market liquidity.
The overall market liquidity remains abundant, the trader said.
The central bank is expected to enhance its efforts in soaking up liquidity in the coming weeks, he said.
The banking sources said the state-owned banks may have lent too strongly in August, for which the People's Bank of China (PBOC) decided to give them a warning.
The PBOC declined to comment.
In a major step to mop up liquidity, the central bank has told banks to include their margin deposits in required reserves at the central bank, pulling an estimated 800-900 billion yuan ($125-141 billion) from the banking system.
Designated bills are usually adopted by the PBOC to tame lending of individual banks.
The central bank will target a few banks by forcing them to purchase a certain amount of bills at given prices.
The move is widely regarded as less potent to other administrative moves in control liquidity and lending, such as changes in bank credit quotas and required reserve ratios.
($1 = 6.384 Chinese Yuan)
(Reporting by China newsroom; Editing by Ken Wills)
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