Beijing plans to inject 40 billion yuan (about HK$37.24 billion) into four asset-management firms being set up to take over the non-performing loans of the four largest state banks, according to top finance and banking officials. In a move to accelerate the process, the four companies - modelled after the United States' Resolution Trust, would be launched 'within the next three months', People's Bank of China vice-governor Liu Mingkang said yesterday. Mr Liu was speaking on the sidelines of the China Forum organised by CLSA Global Emerging Markets. The mainland set up its first asset-management company, China Cinda Asset Management, late last month to take over 200 billion yuan in non-performing loans from China Construction Bank. Vice-Finance Minister Lou Jiwei said the finance ministry had injected 10 billion yuan into China Cinda as registered capital. The other three firms would get about 10 billion yuan each, depending on the size of bad debts they took from the banks. Previous reports had indicated asset-management companies for the other three banks - the Agricultural Bank of China, Industrial and Commercial Bank of China, and Bank of China - would be launched in the second half of this year. 'Forty billion [yuan] is not a big sum and it has been taken into account in our budget deficit for the year,' Mr Lou said. However, that was the maximum the government planned to invest in these companies, he said. Mr Liu said the life span of the four companies would be 10 years, meaning Beijing expected to resolve the problem during that period. The success of the mainland's banking reforms was crucial to the country's economic stability, bankers and analysts said. Non-performing loans might amount to as much as two trillion yuan, or about a quarter of all loans granted by the big four state-owned banks. The central bank estimated such loans at about 10 per cent of loans.
