BEIJING: China Cinda Asset Management offered nearly US$7 billion in soured loans to investors in its largest-ever sale, underscoring government pressure on banks and asset managers to settle China’s debt pile as economic growth stalls.
Cinda is the only listed asset manager among the four bad-loan companies set up by the Chinese government a decade and a half ago and the country’s second-largest in terms of assets.
Its promotion comprised 35.3 billion yuan (US$5.7 billion) in outstanding principle and 8 billion yuan in interest from companies involved in everything from textiles and transport to home appliances and shipbuilding in Zhejiang Province, which the bank regulator says saw the highest amount of bad loans among all Chinese provinces as of the end of last year.
“Everybody is optimistic,” Hu De, head of Cinda’s Zhejiang branch, said at the sales event in Hangzhou. “Many investors here have a real nose for the market.”
About a third of the nearly 1,700 bad-debt portfolios on offer were from Wenzhou, a hub of startups and private firms. Investors from 120 institutions, including Goldman Sachs Group Inc and Oaktree Capital Management, attended the event.
China’s economy is set to grow at its slowest pace in a quarter of a century, heightening Beijing’s concerns about bad debts in the banking sector, where non-performing loans are rising at their fastest rate since 2004, data from the China Banking Regulatory Commission shows.
The amount of new NPLs in the first quarter has already reached 56 percent of the total increase in NPLs last year, the CBRC added.
“It’s a huge market that’s going to become bigger and bigger,” said Zhu Zhiqun, a Zhejiang entrepreneur who is setting up his own asset-management company. “In some cities, less than 10 percent of factories and companies are operating normally.”
Cinda’s Zhejiang branch last year bought more than 70 bad loan packages from banks including the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Bank of China, the company said in its annual report.
Cinda also said it would increasingly use Alibaba Group Holding Ltd’s flagship marketplace Taobao to auction troubled assets. In March, Cinda’s Zhejiang branch sold two factory debts for 24 million yuan in its first such sale via the platform.
