PBOC Raises Billions To Bail Out Chinese Banks As Property Sector Teeters On Brink Of Collapse

Earlier this month, Evergrande, China’s perennially troubled real-estate developer, announced that foreign lenders had seized more than $2 billion in deposits belonging to one of its subsidiaries in an effort to recoup money owed by the firm. Holders of the company’s bonds (which had been in default for weeks) were apoplectic, and the whole incident has once again laid bare the rot at the core of China’s property sector (even as Evergrande promised to swiftly produce an emergency debt-restructuring plan, something that was seen as a band-aid on a bullet wound).

With the country’s property sector teetering on the precipice (keep in mind, a collapse could have global repercussions on par with the Great Financial Crisis, as we have pointed out in the past)…

…The CCP leadership has reportedly devised a plan to raise hundreds of billions of yuan for a new fund to backstop the country’s troubled financial firms in an effrt to create a buffer against a punishing property sector default.

Here’s more from Bloomberg:

The People’s Bank of China is leading the effort, seeking to shore up confidence in the $60 trillion financial system as the economy slows and a debt crisis in the property industry spreads. The stability fund would dwarf other pools available to bail out troubled institutions and their depositors.