Business / Companies

Baosteel works to improve loan system

By XIE YU ( Updated: 2014-03-24 18:20

China's steel giant, Baosteel, announced on Sunday night that it plans to invest up to 50 million yuan ($8 million) to set up a joint venture with Shanghai Ganglian E-commerce Holdings in a bid to improve chattel mortgages in the industry.

Chattel mortgages are loan arrangements under which movable property is used to secure a loan, as opposed to fixed real estate.

Baosteel said its subsidiary Dongfang Steel E-commerce is in talks with Ganglian, an A-share listed company, to invest up to 100 million yuan to build an information-sharing platform that supports chattel mortgages in the steel industry. Dongfang will be the biggest shareholder.

Baosteel and Ganglian both acknowledged in filings that the project is under discussion but said numerous hurdles remain.

Baosteel has vigorously promoted the development of an information-sharing platform, which analysts believe necessary for responsible lending.

The company said on its website that it has already formed the standard online transaction model, including public bidding, price-check bidding and comprehensive bidding.

Commodities such as steel can be used multiple times, like real estate, to secure loans, and so it's essential that a system be devised to share information showing all the lienholders, analysts said. Many banks have not trusted third parties to strictly oversee movable collateral.

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