Sorry for taking so long to find this. Most are only reporting the first story and not the retraction. I like the first story better of course.

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China Denies Report It's Banned Lending to U.S. Banks (Update1)

By Zhang Dingmin

Sept. 25 (Bloomberg) -- China's banking regulator denied a media report that it had banned the nation's lenders from offering credit to U.S. financial institutions.

The regulator has ordered Chinese banks to halt inter-bank lending in all currencies to U.S. banks to avoid possible losses during the financial crisis, the South China Morning Post reported today, citing people it didn't identify.

The banking regulator ``never, through any channel, announced or notified domestic banks to ban lending to U.S. financial institutions,'' China Banking Regulatory Commission spokesman Liao Min said in a statement on the commission's Web site today. The commission condemned the ``irresponsible'' report and reserves the right to take legal action, the statement said.

Chinese banks mostly avoided the more than $520 billion of writedowns and credit losses by global financial firms. They hold a combined $721 million of assets at risk related to Lehman Brothers Holdings Inc., which filed the biggest bankruptcy in history Sept. 15, according to Bloomberg calculations based on the most recent data released by Chinese lenders.

China Investment Corp., the nation's $200 billion sovereign wealth fund, bought 2 million Shanghai-traded shares in each of the nation's three largest banks this week, in an attempt to shore up a stock market that's tumbled almost 60 percent this year.

To contact the reporter for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net

Last Updated: September 25, 2008 01:17 EDT

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