When the Industrial and Commercial Bank of China (ICBC), the world’s largest bank by asset size, started to auction RMB 657 million ($101.5 million) of its non-performing assets in six tranches on Monday, it drew strong interest from bad loan disposal firms, reported the South China Morning Post.
A tidal wave of asset disposals is now on the horizon, as the world’s second largest economy recognizes the rising number of bad assets from its years-long economic slowdown and particularly from the coronavirus pandemic shock last year.
“The non-performing loans that need to be addressed could increase further in 2021 and the situation may last until next year,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told a media briefing in Beijing on Tuesday, reported the SCMP.
“After the pandemic, it will be hard for some businesses with abnormal operations to repay [loans], and quite a number of them could face bankruptcy restructuring or even liquidation. So the rise of non-performing loans is inevitable.”