China Great Wall Asset Management Co. became a restructured joint-stock firm on Sunday, with an eye toward a market listing and a bigger role in tackling China’s mounting bad debt, Reuters reports.
Great Wall is one of the country’s big four state-owned bad debt managers set up in 1999 to buy non-performing loans from the country’s four biggest state-owned banks.
It has handled about 1.7 trillion yuan (US$246.23 billion) in bad debt so far.
The transition to a shareholding company means Great Wall, which was previously wholly owned by China’s finance ministry, can now sell stakes to new shareholders and list itself on a stock market.
Great Wall chairman Zhang Xiaosong said at a ceremony in Beijing on Sunday that the restructuring marks “a new era” for the company, which will continue to focus on bad debt solutions and asset management to help curb financial risks and support China’s economic development.
The move means it could list itself on a domestic or offshore stock market as early as the first half of next year, which would expand its capital base and allow it to take a bigger role in helping the government manage debt issues.
Senior officials from the finance ministry, the central bank and the banking regulator attending Sunday’s ceremony emphasized the importance of distressed debt managers to help resolve China’s current economic problems, especially ballooning debt.
“The economy still faces increasing downward pressure. In particular, leverage in the non-financial corporate sector continues to rise and bad loans at commercial banks keep rebounding,” Fan Yifei, vice governor of the People’s Bank of China, said at the event.
“[We] need to further use financial asset management companies to resolve existing non-performing assets in the financial system to curb financial risks,” Fan said.
Debt has emerged as one of China’s most pressing economic challenges, with the country’s total debt load rising to 255 percent of GDP in the March quarter this year from 147 percent in 2008, according to Moody’s Investors Service.
Chinese companies sit on US$18 trillion in debt, equivalent to about 169 percent of GDP from 97 percent. Most of this is held by state-owned firms.
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