China is considering moving stakes in bad debt managers to sovereign fund -Bloomberg News

:China is considering transferring government ownership in the country’s biggest bad debt managers to a unit of its sovereign wealth fund, Bloomberg News reported on Friday.

Under the proposal, the Ministry of Finance will move its stakes in China Cinda Asset Management Co, China Great Wall Asset Management and China Orient Asset Management to Central Huijin Investment, the report said, citing people familiar with the matter.

Calls to China Cinda, China Great Wall, China Orient and Central Huijin Investment for comment were not answered. China Investment Corp., parent of Huijin, did not immediately reply to requests for comment sent by email.

The move shows Beijing’s commitment to separating the government’s roles as a regulator and shareholder, as it tightens its grip over the country’s financial sector to prevent systemic risks.

China established the three asset management companies (AMCs) and China Huarong Asset Management Co in 1999 to help handle bad loans from the country’s four largest state banks, which were facing an insolvency crisis.

But the distressed asset managers expanded beyond their initial remit, and themselves began posing risks to the financial system.

In response, Beijing in recent years have urged the bad debt managers to return to their core businesses and offloaded assets. As of the end of 2022, the four AMCs had a combined total assets of about 4 trillion yuan ($578.70 billion).

China Huarong Asset Management Co., once the biggest among so-called AMCs, will be excluded from the latest reform, the report said. In a government-orchestrated bailout in 2021, troubled Huarong saw Citic Group overtake the finance ministry as its largest shareholder.

($1 = 6.9121 Chinese yuan renminbi)


Source: Reuters