Ren Gulong and Zhang Jiaqi
NPL MARKET IN CHINA
As China’s economic growth slows down, non-performing loans (“NPLs”) continues to rise. According to the regulatory indicators released by the China Banking and Insurance Regulatory Commission (“CBRC”), the balance of commercial banks’ NPLs reached RMB 2.03 trillion by the end of the third quarter of 2018. CBRC urges Chinese banks to make greater efforts to manage and dispose of their NPLs. As a matter of fact, supportive policies have been consecutively enacted by Chinese government in recent years so that more investors are given opportunities to participate in China’s NPLs market.
The major players in China’s NPLs market are the big four state-owned assets management companies (“AMCs”), which were established by the Chinese government in 1999 to purchase NPLs from the big four Chinese commercial banks. Since CBRC allows setting up of local AMCs to participate in NPLs disposal in 2012, over 70 local AMCs haven been established. In June 2018, CBRC further issued Pilot Management Rules For Financial Assets Investment Companies (《金融资产投资公司管理办法(试行)》), encouraging commercial banks to set up a subsidiary to engage in swap of NPLs into equities.
Authored by Ren Gulong <Ren Gulong@anjielaw.com>, Zhang Jiaqi <firstname.lastname@example.org> at AnJie Law Firm