Five regions have been given the green light from China’s banking regulator to establish asset management companies specializing in the purchase of financial institutions’ bad loans, Bloomberg reported, citing three anonymous sources. The trial program covers Shanghai, Guangdong, Zhejiang, Jiangsu and Anhui. The firms can buy local soured loans from banks, trust and finance companies and leasing firms, sources said. Premier Li Keqiang is grappling with reining in credit risks following an unprecedented surge in lending since the global financial crisis. Banks’ non-performing loans jumped by RMB54 billion (US$8.7 billion) in the three months through March, the biggest quarterly increase since 2005.
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