Banks setting up distressed asset management arms

Move is part of business strategy shift away from profits based on interest rate spreads

China's five largest State-owned commercial banks are planning to set up their own asset management subsidiaries to carry out debt-to-equity swap programs, said people with knowledge of the matter.

Agricultural Bank of China Ltd announced on Tuesday its board of directors approved the proposal to establish a wholly owned subsidiary, ABC Asset Management Co, in Beijing with a total capital contribution of 10 billion yuan ($1.45 billion).