Wednesday, March 3, 2010

Top China bankers want tax incentives for small loans

By George Chen

BEIJING, March 3 (Reuters) - Two top Chinese bankers have urged Beijing to provide tax incentives and relax regulations to promote lending to small and medium-sized enterprises (SMEs) to aid recovery from the financial crisis and create jobs.

Ma Weihua, president of China Merchants Bank Co Ltd (600036.SS)(3968.HK), China's sixth-largest bank, and Dong Wenbiao, chairman of China Minsheng Banking Corp (600016.SS) (1988.HK), submitted separate proposals to the government this week urging regulators to issue SME-friendly lending rules as soon as possible.

"Bank lending remains a major financing tool for SMEs in China, where SMEs are playing a more important role than ever in maintaining economic growth in the wake of the global financial crisis," Ma said in his proposal seen by Reuters on Wednesday. "In particular, the government should support lending to SMEs that can offer job creation and have innovative business models."

Ma urged Beijing to provide tax incentives to banks for SME lending.

Minsheng Bank's Dong suggested that regulators not include lending to SMEs in regulatory quotas for loans and deposits, which have been a major concern to Chinese banks.

Dong urged the banking regulator to work with the country's tax authority and Finance Ministry to draw up new rules and offer tax incentives for SME lending to improve bank profit margins.

He said individual loans of less than 5 million yuan

($732,500) for SMEs should be considered for tax incentives.

Minsheng Bank, the country's first private bank, is ranked No.7 by assets in China behind Merchants Bank. Ma and Dong are delegates to top political advisory body the Chinese People's Political Consultative Conference, which meets annually. The CPPCC 2010 annual meeting starts this week in Beijing.

SMEs contribute more than half of China's gross domestic product.

China Construction Bank (0939.HK)(601939.SS), one of the Big Four state lenders, plans to provide 100 billion yuan in funding to SMEs in 2010, state media reported on Wednesday.

Foreign banks including Citigroup Inc (C.N) and HSBC Holdings Plc (HSBA.L)(0005.HK) are also keen to expand into SME lending as many Chinese SMEs, for example, Geely, which is set to acquire Ford's (F.N) Volvo unit, has emerged as a market leader after years of rapid growth.

"Small enterprises usually receive more money from banks than they can deposit, so many banks prefer to lend to big enterprises that are also major deposit clients. This scenario makes it very difficult for SMEs to get loans" said Dong.

China's central bank and banking regulator issue lending guidelines every year to domestic banks to establish lending limits.

The China Regulatory Banking Commission has lowered its 2010 lending target to about 7.5 trillion yuan from a record 9.6 trillion yuan last year, when banks rushed to support economic growth at the government's behest.

As the regulator is in particular concerned by lending to big projects and large enterprises in some overheated sectors, banks are seeking alternatives to maintain loan growth. Regular loan and deposit operations are still major profit sources for most Chinese banks.

($1=6.826 Yuan)

(Additional reporting by Xie Heng and Samuel Shen)

((Editing by Chris Lewis))

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NORDIC STOCKS - Factors to watch on March 3NORDIC STOCKS - Factors to watch on March 3

HELSINKI, March 3 (Reuters) - The following stocks may be affected by newspaper reports and other factors on Wednesday:


Danish biopharma firm Genmab reported losses for 2009 after the Copenhagen bourse closed on Tuesday and said it expected 2010 operating losses from continuing operations of 550-650 million Danish crowns ($118.1 million) ($99.94 million-$118.1 million) excluding royalties. Genmab also said it expected sales this year, excluding sales of its Leukaemia drug Arzerra, of 350-450 million crowns. [ID:nLDE6201WH]

For more on the company, double click on [GEN.CO]


Danish wind turbine maker Vestas' Spanish rival Gamesa (GAM.MC) is considering establishing a manufacturing plant in Denmark and has been looking at sites, financial daily Borsen said. The aim would be to boost Gamesa's position in the offshore turbine market, the paper said.

For more on the company, double click on [VWS.CO]


Norwegian insurance company Storebrand's embedded value at the end of 2009 was 28.5 billion Norwegian crows ($4.78 billion), up from 23 billion crowns at the end of 2008.

For more on the company, double click on [STB.OL]


The purchase of Volvo Cars by China's Zhejiang Geely (0175.HK) has been delayed for unknown reasons, daily Dagens Industri quoted a source in Volvo parent Ford's top management saying.

On Tuesday, Stephen Odell, the chief executive of Volvo Cars, said nothing had changed in the proposed timing of the deal, with signing planned before the end of the first quarter.

For a full story, double click on [ID:nWEB3421]

For more on the company, double click on [F.N]

FINNAIR (FIA1S.HE) Finnish national carrier is likely to remain in the red the first half of this year, Finnair's chief executive officer was quoted as saying in a newspaper.

Mika Vehvilainen declined to predict to daily Helsingin Sanomat when the firm would break-even, but said the company had to stop leaking the money out and slowly get back to profit.

Last month Finnair forecast it would be clearly loss-making in the first quarter of 2010, while cost cuts was expeced to improve profitability towards the the end of the year.

For more on the company, double click on [FIA1S.HE]


Finnish retailer and department store group Stockmann said it planned to merge its mail order subsidiary Hobby Hall into parent company to clarify structure and to cuts administrative costs. It said the registration of the merger would take place on June 30.

For more on the company, double click on (STCBV.HE)


Finnish mobile phone maker unveiled a new 5230 Nuron smarphone aimed for T-Mobile's customers in the United States market.

For more on the company, double click on [NOK1V.HE]

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(Additional reporting by Copenhagen, Oslo and Stockholm newsrooms) (Helsinki Newsroom; +358-9-6805-0244) ($1=5.957 Norwegian Crown) ($1=5.503 Danish Crown)

Geely in new energy car research, no products soon-chairman

BEIJING, March 3 (Reuters) - China's Geely Automobile Holdings (0175.HK) is researching new energy cars but the automaker sees no new products in next one to two years, the company's chairman said on Wednesday.

Geely Chairman Li Shufu talked to reporters on the sidelines of the opening of the Chinese People's Political Consultative Conference in Beijing.

Its parent company Zhejiang Geely Holding Group is bidding for Ford Motor Co's (F.N) Volvo unit.