|
China commences massive auction of bad loans
(Agencies)
Updated: 2004-11-26 12:52
China on Thursday started its biggest sale of bad loans, inviting Citigroup,
Morgan Stanley and other companies to bid for assets valued at $18.1 billion,
more than four times the total sold so far to overseas investors.
Great
Wall Asset Management, which disposes of nonperforming loans for Agricultural
Bank of China, is selling all its distressed assets, with a face value of 150
billion yuan, the company said on its Web site. Overseas investors previously
purchased loans in China valued at 33 billion yuan, or $4
billion.
Clearing bad loans is essential for Chinese banks as the nation
prepares to give overseas competitors greater access at the end of 2006. By
Sept. 30, China's four state-owned asset managers had disposed of 31 percent of
the 1.9 trillion yuan of loans they collected from the nation's four largest
banks since 1999, according to the China Banking Regulatory
Commission.
"They want to speed up the resolution of bad loans before
China fully liberalizes and opens up for foreign banks in 2007," said Arthur
Lau, a Singapore-based analyst at Barclays Capital. "Because of the agricultural
nature of the loans, it's hard for them to realize a high recovery rate."
Bids are due in the first week of January, Great Wall said, without
disclosing whether it had hired an adviser. Agricultural Bank is the smallest of
China's four big state-owned banks.
Great Wall had recouped 10.6 percent
of the face value of its loans as of Sept. 30, according to the banking
regulator, compared with a recovery rate of more than 20 percent at the three
other agencies. The nation's 15 biggest banks hold about 1.7 trillion yuan of
bad loans, according to the regulator.
China last month announced new
regulations to speed up the transfer of bad loans to overseas
investors.
The new rules require asset managers to report proposed loan
transfers within 20 days of an agreement to the Development & Reform
Commission, which is then required to send a confirmation letter within 20
working days. The approval process used to take about 18 months.
The
Chinese asset managers increasingly favor grouping assets in portfolios rather
than selling them individually because that can speed up the pace of disposal
and reduce losses. Two of them, Cinda Asset Management and Huarong Asset
Management, also plan to start offering investment-banking advice.
The
nonperforming assets on sale by Great Wall are located throughout China, except
in Tibet, an official in charge of investor relations at the Beijing-based
company said Thursday.
The sale may be completed in June after letters of
intent are signed in March, according to the notice on the Web
site.
| |
 |
|
|
|
|
Today's
Top News |
|
|
|
Top China
News |
|
|
|
|
|
|
|
|
|
