Bank of Communications joins peers in auctioning non-performing loan collateral
The Bank of Communications is preparing to auction 95 key development projects seized from delinquent borrowers in Guangdong and Hainan provinces in the first major sale of loan collateral by a second-tier mainland bank.
Over recent years, sales of bad loans or the assets that once backed them have been led by China's so-called 'Big Four' state banks - Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China.
The planned auction by Shanghai-based Bank of Communications, China's fifth-largest bank, is a reminder that second-tier mainland financial institutions are also beset by problem loans despite their reputation for having better management.
It also highlights the growing competition among Chinese banks in the race to clean up their loan books, with those coming first to market generally able to command higher prices.
According to a Bank of Communications spokesman in Shanghai, the auction will be conducted within the next two weeks.
'These assets were built in the early 1990s. After the [domestic economic] austerity measures in the mid-1990s and the Asian financial crisis, many borrowers had trouble repaying their loans,' the spokesman said. 'Hainan and Guangdong have the biggest concentrations of bad real-estate loans.'
