Chinese AMC’s at risk: BIS
(China) - Four asset-management companies set up in 1999 to quarantine the bad debts of China's state-owned banks are themselves at risk, according to a report from the Bank of International Settlements (BIS).
The four AMC's were set up to clean up the Chinese banking sector, and assumed non-performing loans held by the Big Four state-run banks - the Industrial and Commercial Bank of China, the Agricultural Bank of China, China Construction Bank and the Bank of China.
The AMC's have been trying to on-sell the debts or collecting on them themselves, but the BIS report warns that the collection is going so slowly that it now poses a threat to the banking system.
The BIS says the four AMC's collected only 45.5 billion RMB (US$5.5 billion) in cash to the end of June this year, and that they face a combined annual interest obligation of 30 billion RMB on more than 1.1 trillion RMB in bonds held by the Big Four and the central bank, the People's Bank of China.
The bonds were issued by the AMC's in exchange for the non-performing assets.
The AMC's have been trying to on-sell the debts or collecting on them themselves, but the BIS report warns that the collection is going so slowly that it now poses a threat to the banking system.
The BIS says the four AMC's collected only 45.5 billion RMB (US$5.5 billion) in cash to the end of June this year, and that they face a combined annual interest obligation of 30 billion RMB on more than 1.1 trillion RMB in bonds held by the Big Four and the central bank, the People's Bank of China.
The bonds were issued by the AMC's in exchange for the non-performing assets.
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