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China Merchants Bank to Finance Smaller Enterprises with 5 Bln Yuan Loan

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The China Merchants Bank (CMB) plans to lend no less than 5 billion yuan (US$730 million) in 2009 to help domestic smaller enterprises develop, compared with a total of less than 10 billion yuan for the purpose in the past two decades, the bank said on Saturday.

Earlier this month, the bank obtained financial license from the China Banking Regulatory Commission (CBRC) for its newly founded smaller enterprise credit center in east China's Jiangsu Province.

The country's top banking regulator issued a guideline on December 1 for commercial banks to set up financial institutes specialized in providing service to smaller enterprises. The CMB center is the first institute of the kind to get a CBRC license.

"We will provide loan up to 10 million yuan to companies with annual sales income below 100 million yuan," said the center vice chief Wei Xiaoping.

According to the CBRC guideline, such specialized institutions should be established by commercial banks as a quasi-corporate body or subsidiary that will run independently.

"Our long-term goal is to develop the credit center into a real specialized bank for smaller companies," said the center head Yang Shaowei.

Smaller enterprises are identified by the CBRC as those with an authorized credit no more than 5 million yuan, assets of less than10 million yuan or annual sales of less than 30 million yuan.

These standards only apply to document filing, and banks could set other definitions.

Amid the global financial crisis, China's small and medium-sized enterprises, largely labor-intensive and vulnerable to fluctuations in domestic and external demand, are affected most.

In the first half of 2008, 67,000 such companies, each with a business volume exceeding 5 million yuan, closed and laid off more than 20 million employees, said the National Development and Reform Commission.

That figure doesn't include service industry firms or small companies with sales of less than 5 million yuan, as there are no authoritative figures available on those categories.

(Xinhua News Agency December 14, 2008)