Date
16 December 2017

BOC sells bad loans to investment-bank unit, WSJ says

Bank of China Ltd. has started a new strategy of unloading soured loans to its investment-banking unit, which then would try to restructure the debt with the hope of recovering more than it paid for the loans, the Wall Street Journal reported Thursday, citing bank officials. With the investment-banking unit expected to pay more than an outside investor, the bank would be able to record lower loan losses, it said. Under Chinese accounting rules, the problem loan would no longer stay on the bank’s balance sheet after the sale. Other big four Chinese banks are looking at similar strategies, the report quoted banking executives as saying. The tactic likely will renew questions about whether lenders are making the books look healthier than they really are, analysts reportedly said.

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