The Diversification Of China'S Four Largest Asset Management Co

In 1999, China's four largest state-owned banks began to set up Asset Management Co to carry their bad loans. These new Asset Management Co have a mission to sell these troubled assets as much as they can, or to recover funds from these troubled assets. They themselves have been given 10 years of life and will be quietly closed afterwards.

These Asset Management Co are destined to become footnotes and testimonies of an era. In that era, banks, including China Construction Bank, ICBC (ICBC), Bank of China (Bank of China) and Agricultural Bank of China (Agricultural Bank of China), are the wings of the state, serve the country and issue loans according to the national order. If the loan is out of order, the responsibility will be borne by the state rather than the banks themselves.

That may be the original plan, but it is planned. Execution process China has gone the same way.

In the early days of these debt disposal institutions, including China's China Cinda Asset Management, China Huarong Asset Management Co (China Huarong Asset Management), China the Great Wall China (China Great Wall China) and Wall (Cinda), some foreign investors flocked to Beijing hoping to purchase bad loans from these companies at an ultra-low discount price, but were disappointed to find that they were obviously unwilling to sell.

"The sooner they deal with these loans, the faster they give themselves. Dig the grave Why do they want to die? " A permanent banker in Hongkong said. The banker has extensive business contacts with these Asset Management Co.

Now it seems that the initial reluctance to sell these bad loans is foresight, because many of the state-owned enterprises that borrow money are booming now, enabling Asset Management Co to extend their life expectancy.

By selling loans, collecting interest on loans and Debt to equity swap In other ways, these Asset Management Co have now recovered a lot of money and have launched extensive financial operations.

After the beginning of the unlucky starting point, the four Asset Management Co went far away from the original intention of dealing with bad debts and turned themselves into "quasi quality" investment banks. They all have multiple business platforms, which may include leasing, securities brokerage, real estate and trust, to help them diversify.

According to those who have dealings with these Asset Management Co, XinDa and Huarong are farthest away on this road. XinDa is the Asset Management Co of CCB, and Huarong is the platform established by ICBC.

According to 4 people familiar with the matter, XinDa, founded more than ten years ago to deal with the bad loans of China Construction Bank, is looking for at least one strategic investor. This is the prelude to the company's first coming to Hongkong next year.

For example, as of December 2006, Huarong had the right to deal with 400 billion yuan debt owed by 4 000 borrowers. These enterprises are diverse, including Steel Corp, power equipment manufacturers, materials companies, electronics manufacturers and car companies. According to a memorandum for potential investors in October 2005, the company also "reclaimed real estate and other physical assets, including land use rights, commercial real estate, construction and equipment", some of which were sold to state-owned enterprises and private enterprises. According to information from the company's website, Huarong also owns 300 companies. Some of them have been listed, so they have more financial resources to fulfill their obligation to repay loans.

Although the four Asset Management Co are large and expanding rapidly, for example, XinDa has many branches and thousands of employees, but they are still not very spanparent. Red Capitalism co-author Carle Carl (Carl Walter) said that these Asset Management Co belonged to the government, and from the moment the bad loans were stripped out of the bank balance sheet, the flow of funds between the government and these Asset Management Co is still not fully spanparent. Voight has tried to track the flow of funds.