Date
22 August 2017
Shanghai and four other regions have been allowed by the national government to set up asset-management companies to buy bad loans from financial institutions. Photo: Bloomberg
Shanghai and four other regions have been allowed by the national government to set up asset-management companies to buy bad loans from financial institutions. Photo: Bloomberg

Five regions get green light to form bad-loan firms

Shanghai and four other regions have secured the go-ahead to set up asset-management companies to buy bad loans from financial institutions, Bloomberg News reported on Tuesday, citing sources.

The pilot scheme, which also covers Guangdong, Zhejiang, Jiangsu and Anhui, allows the firms to buy local soured loans from banks, trust and finance companies and leasing firms, the report said.

Premier Li Keqiang seeks to rein in the country’s growing credit risks following an unprecedented surge in lending since the global financial crisis, according to the news agency. Banks’ nonperforming loans jumped by 54 billion yuan (US$8.7 billion) in the three months to March, the biggest quarterly increase since 2005.

China already has four national asset management companies — Great Wall, Orient, Huarong and Cinda, set up in 1999 after decades of government-directed lending to unprofitable enterprises.

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CG

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