SPD Bank Denied 1.5Bl Unsecured Loan in Bankruptcy LDK07-24 16:56 Caijing
The Shanghai Pudong Development Bank denied a rumor of a risky loan of up to 1.5 billion yuan in LDK Solar., Ltd, as the leading Chinese PV solar maker was heading for bankruptcy.
The bank has granted a 950 million yuan of credit line to LDK in two parts, and the company has been repaying interest and principal as normal, the bank said.
Rumors have it that the government has asked banks not to suspend lending to LDK, and that one of the company's huge liabilities was an unsecured loan of 1.5 billion yuan from the SPD bank.
Senior executives at the state-controlled bank, who have been given handsome rewards for growing credit performance, have to take responsibilities for potential losses from the loans to LDK, said Tan Haojun, a renowned Internet commentator.
Known as one of world's largest polysilicon maker, LDK had expanded rapidly in recent years backed by the government. Its balance sheet, though, has started shrinking since the beginning of the year, due to serious overcapacity problem across the industry.
Ending March, its total assets reduced 1.24 billion yuan from the beginning of the year, with a total liability of 29.3 billion yuan.
To avoid a knock-on effect from a potential bankruptcy, creditor banks including China Development Bank, Bank of China, and China Construction Bank have established a "special committee", working with local government, to oversee LDK's capital flows, according to Chinese media.
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