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The first contract aiming to dispose of China's huge non-performing loans via the international market was signed in Beijing Wednesday, as a new step to maximize the value of state assets.
The China Huarong Asset Management Corporation (CHAMC), China's largest such company, has appointed Ernst & Young as its sole financial advisor to bring to the market a portfolio of Huarong's non-performing loans and assets of over US$3 billion.
CHAMC President Yang Kaisheng said that the two sides will work together to establish an "objective" assets evaluation system based on international practices, to realize the transfer of its equity and shareholding rights to foreign investors.
Meanwhile, the related departments of the Chinese government are busy drafting laws and regulations to back the management of the loans via the international market, Yang disclosed.
Anthony Wu, chairman of Ernst & Young, said, "CHAMC is the ideal entry vehicle to open the Chinese NPL market to international investors based on their understanding of the process and commitment to the financial reform."
So far, China's four assets management companies have purchased such loans valued at 1.3 trillion yuan, with Huarong holding the lion's share of over 500 billion yuan.
Huarong's assets involve 70,000 debtors, with state-owned enterprises accounting for 68 percent. It is also a shareholder in more than 500 enterprises.
Ernst & Young, one of the world's top five accounting firms, entered the Chinese market in 1979, providing accounting, auditing, taxation and other services. It has been credited with pioneering distressed assets and non-performing loans in Japan and Thailand.
(Xinhua 02/21/2001)
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