The China financial watchdog has given the go-ahead to the formation of a new national asset management company (AMC) to manage non-performing loans (NPLs).
The creation of the new bad-debt manager is aimed at managing NPLs worth around CNY5trn ($714bn) that has weighed down the performance of the country’s financial services providers.
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The approval by the China Banking and Insurance Regulatory Commission (CBIRC) marks the first of its type granted since 1999.
The decision enables the conversion of Beijing-based Jiantou Citic Asset Management into a financial AMC.
The business will operate under the name China Galaxy Asset Management after the transition.
The deadline for the transition is six months.
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By GlobalDataJiantou is barred from carrying out financial activities during the transformation.
Jiantou was set up in 2005 to take over certain assets of brokerage firm Huaxia that faced a rough patch owing to overexpansion.
State-owned Central Huijin Investment holds a 70% stake in Jiantou, with the balance interest owned by Citic Securities.
China’s four existing AMCs, namely Cinda, Huarong, Great Wall as well as Orient, were launched in 1999 to manage the toxic assets of the country’s four big banks.
The country has not cleared the formation of any other national debt manager since that period.
However, over 53 local AMCs have been green-lighted in recent years.
