China state banks sell $34b of bad loans
Reuters, Hong Kong
China's Cinda Asset Management will buy US$33.7 billion (278.7 billion yuan) of bad loans from Bank of China and China Construction Bank as the state-run lenders clean up their balance sheets to enable stock listings by the end of 2005.Bank of China, China Construction Bank and the rest of the country's "Big Four" state banks are hamstrung by a combined non-performing loan ratio of around 20 percent, a legacy of politically driven lending to state-run companies. Cinda outbid three other asset management companies, Huarong, Orient and Great Wall, and bought the loans at around 30 percent of their book value, a Cinda spokeswoman said Wednesday. Cinda aims to sell the bad debt to the other asset managers and foreign investors by the end of 2005, the spokeswoman said. China's central bank had bought the loans at a 50 percent discount and auctioned them last week between the four asset managers, which were established in 1999 to take over nearly $169 billion (1.4 trillion yuan) in bad loans from the state banks. Cinda is taking on bad debt worth $18.1 billion (149.8 billion yuan) from Bank of China and $15.6 billion (128.9 billion yuan) from China Construction Bank, the spokeswoman said.
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