Top financial regulators in China granted final approval to a new asset management company (AMC) to deal with bad loans and toxic assets nationwide, adding a new player to a sector controlled by four state giants for more than two decades, reported Caixin.
The China Banking and Insurance Regulatory Commission (CBIRC) Thursday approved the opening of state-owned China Galaxy Asset Management, making it the first national bad-asset manager to be launched since 1999.
The new bad loan manager will open as Chinese banks face greater bad loan concerns with fallout from the Covid-19 pandemic pounding their bottom lines. China’s $45 trillion banking industry suffered the worst profit slump in more than a decade in the first half after being put on the front line to help millions of struggling businesses amid the pandemic, said Caixin.
China Galaxy’s business will include buying and investing in nonperforming assets of financial institutions, taking part in debt-to-equity swaps, offering loans to financial institutions, investing in fixed-income securities and issuing bonds, as well as carrying out bankruptcy restructuring and management, according to the CBIRC.