The Guangdong Bank Association has published a black list of seven debtor companies which deliberately defaulted on bank loans in order to alert all financial institutions in the southern province.

This is the first time that the names of debtors have been made public in this way in the province.

The seven companies in the list are in arrears in loans totalling 300 million yuan to banks in Guangdong province, according to a local media report. Guangzhou Disheng Corporation was said to be three years or 130 million yuan in arrears on loans to the Guangdong Branch of the Industrial and Commercial Bank of China.

Besides Guangzhou Disheng, there are also are three other Guangzhou companies on the list, two from Zhuhai and one from the neighboring Huizhou.

Sources from the local bank association said that they would impose sanctions on the debtors by freezing their bank accounts and cutting off all further loans..

According to the sources, rampant debt defaults had threatened the financial safety of Guangdong banks and hurt the overall market credibility.

One of the debtors on the list, Zhuhai Huaxia Investment Company,?has changed its name three times and moved around since 1992 to dodge a 50-million-yuan debt it owed to Guangdong Development Bank. The bank recently filed a lawsuit against it but discovred that its mortgage could not recover the debt.

Sources said that the bank association has circulated internal notices of more than 1,000 default debtor companies, but it failed to make the companies pay back the loans.

Publication of defaulting firms has had a greater effect than internal notices. According to a bank spokesman of creditor banks, there were 10 companies in the original list but three of them were removed because they paid up before their names were made public.

(South China Morning Post)