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Orient AMC gets rid of bad loans
By Zhao Renfeng (China Daily)
Updated: 2005-04-19 08:53

China Orient Asset Management Corporation announced yesterday it will promote a 50 billion yuan (US$6.02 billion) tranche of non-performing loans (NPL), the company's largest ever sale, to foreign and domestic investors.

The NPL disposal, also the largest by any of the four State-owned asset management companies, indicates that China is accelerating the settlement of distressed assets and providing further investment opportunities.

"For international investors, it is clearly a good sign as it's a step further by China's asset management companies," Michael Harris, a partner at PricewaterhouseCoopers, told China Daily yesterday.

According to Li Xin, general manager of the asset management department of China Orient, this round of NPL disposal mainly comes from the inventory the company acquired from Bank of China in 2000.

A total of 61 asset pools were promoted yesterday, involving companies engaged in the foreign trade, property and machinery-building industries in more than 20 provinces.

The biggest pool amounts to more than 4 billion yuan (US$480 million). Li said this will provide investors with flexibility and choice.

Nineteen investors signed letters of intent with China Orient yesterday for 10 asset pools, including Deutsche Bank, Morgan Stanley, Credit Suisse First Boston and Galaxy Securities.

Many investors anticipate the flow of NPL transactions to grow in the coming years as many Chinese commercial banks are under pressure to settle the huge burden of distressed assets and get ready for overseas listings.

According to Mei Xingbao, vice-president of China Orient, China's NPL market totals approximately 2 trillion yuan (US$240 billion), in which China Orient now has 430 billion yuan (US$51.8 billion).

Harris said China Orient's promotion is welcomed by foreign investors, who are eager to make even more sizeable investments in China's NPL market.

He said China's sellers need to offer more investment opportunities to attract international investors.

By the end of March, China Orient and its three State-owned peers - China Huarong, China Cinda and China Great Wall - disposed of a total of 688.55 billion yuan (US$82.95 billion), according to a statement released yesterday on the website of the China Banking Regulatory Commission.

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