China's ministry of finance may help clean up the sizeable non-performing loans at Bank of China (Hong Kong) to make the SAR's second-largest bank more internationally competitive. The Financial Daily reported that the ministry would be responsible for the bank's bad debts - estimated at between HK$3 billion and HK$7 billion. They include the bad loans owed by bankrupt Guangdong International Trust and Investment Corp and doubtful loans from the restructuring of Guangdong Enterprises Group, Reuters reported, quoting the daily. According to the report, Beijing-based Bank of China, the mainland's largest foreign exchange bank, plans to set up a Hong Kong-registered asset management company to help clean up bad debts at its Hong Kong subsidiary. It earlier revealed that as of June, it had more that HK$30 billion in bad loans. A Bank of China (Hong Kong) official said it had no information on the loans' issue from its parent. At the beginning of this month, the newly formed Bank of China (Hong Kong) conglomerate brought together 10 sister banks incorporated either in Hong Kong or the mainland. With combined pro forma assets of HK$820 billion, it immediately became Hong Kong's second-largest banking group in terms of assets after HSBC Holdings. However, the new bank is hobbled by a relatively high level of non-performing loans - with a ratio of 9.28 per cent at the end of June. This compares with about 5 per cent for other banks. Last month, Bank of China (Hong Kong) chief executive Liu Jinbao said the bank had considered different ways to tackle the bad-loan problem. Mr Liu proposed the formation of an asset management company as an option. The Financial Daily quoted a source involved in the SAR bank's restructuring as saying the bad-debt plan still required final approval from relevant authorities in the mainland. Bank of China has shifted part of its non-performing loans to Orient Asset Management set up by the finance ministry in 1999. In August, Orient said that by the end of July, it had recovered 8.75 billion yuan (about HK$8.2 billion) in assets.