AMCs bring down non-performing assets
(Xinhua)
Updated: 2004-04-27 09:26

China's four banking asset management companies (AMCs) had either recovered or written off an accumulated 528.68 billion yuan (US$63.7 billion) in non-performing assets (NPAs) by end-March, according to a report released Monday by the banking regulator.

The four -- Huarong, Orient, Cinda and Great Wall -- were set up in 1999 to handle bad loans totaling as much as 1.4 trillion yuan (US$168.7 billion) acquired from the country's big four State-owned banks, namely Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China.

By the end of last month the AMCs had recovered 105.48 billion yuan (US$12.7 billion) in cash from their NPA holdings, said the China Banking Regulatory Commission report.

The China Cinda Asset Management Corp, responsible for bad debts transferred from Construction Bank as well as China Development Bank, posted the fast pace, among the four AMCs, in NPA disposals as having cleared away 123.67 billion yuan (US$14.9 billion).

The China Great Wall Asset Management Corp, which handles non- performing debts largely going to rural projects and farmers -- from the Agricultural Bank, lagged behind and it recovered in cash only 10 percent of the NPA holdings.

The AMCs have been using leases, transfers, restructuring, debt- for-equity swaps and asset securitization, among other methods, to dispose of non-performing loans.

As a matter of fact, a fairly big chunk of their NPAs remained in the hands of China's big four banks following the establishment of AMCs, forcing the banks to fight hard to further bring down their NPA ratios in order to clean their books and meet requirement for public listings.

China is in midst of overhauling its banks to prepare for competition from foreign rivals ahead of 2006, when it will open fully the financial market under a commitment to the World Trade Organization.

Construction Bank said earlier that its NPA ratio declined to 8. 88 percent by the end of March, the lowest among the big four. It is widely anticipated to take the lead to go public, followed by Bank of China in 2005.