By Engen Tham, Ziyi Tang and Clare Jim

SHANGHAI/BEIJING/HONG KONG (Reuters) - A rare Beijing directive to help Vanke beat a liquidity crisis has left lenders scrabbling for the assets that the state-backed developer has proposed for collateral, as parties pull out all the stops to arrest deterioration in the property sector.

China Vanke is gasping for funding after sales in both January and February fell below the monthly break-even point of 20 billion yuan ($2.8 billion), meaning cash flowed out of the business, an internal memo showed.

China's property sector has been in the throes of a crisis since mid-2021. Local policymakers' stimulus and easing measures have struggled to boost sales or increase liquidity, while many property developers have defaulted on debt obligations.

Reflecting the deepening crisis, regulators asked financial firms and creditors to step up financing support for Vanke - China's second-biggest property developer by sales - in a rare intervention by central government, Reuters reported last week.

With plunging sales as well as bond prices clouding Vanke's outlook, the developer has shared a list of mainly commercial projects such as shopping malls and their revenue streams with potential lenders to access fresh credit, said two people with knowledge of the matter.

Those lenders include a group of banks, led by Industrial and Commercial Bank of China (ICBC), which is in early talks to lend as much as 80 billion yuan, two other people said.

Lenders are reviewing as much of the higher-value assets as they can, the people said. At the same time, insurer-creditors have demanded further collateral before agreeing to extensions to the maturities of their debt holdings, said a fifth person.

The people declined to be identified as they were not authorised to speak to the media.

Vanke declined to comment. ICBC did not respond to a request for comment.

"The more demanding approach from creditors shows they have turned cautious even with state-related and better-performing developers, generally perceived as safe," said Gary Ng, Natixis Asia-Pacific senior economist.

"Its more difficult situation shows that the biggest risk in the property market remains in the sluggish home sales."

Analysts estimate the value of Vanke's unpledged commercial property at 77 billion to 90 billion yuan, meaning the developer could borrow as much as 45 billion yuan if banks lend at a 50% loan-to-value ratio.

The ratio could be as much as 70% depending on collateral quality, said some bankers and analysts, underscoring the pressure Vanke faces to add high-value guarantees to its list.