Postponement may prevent mainland's largest commercial bank from meeting accounting deadline The People's Bank of China has sanctioned a last-minute delay in an auction of about 450 billion yuan of impaired loans from the Industrial and Commercial Bank of China (ICBC) to four state-owned asset management firms, according to sources. The postponement of the sale, which is expected to slash ICBC's bad loan ratio from the mid-teens to low single digits, might hinder the mainland's largest commercial bank from meeting its deadline at the end of the month for disposal of the loans, observers said. The asset management firms had been asked to submit bids for the so-called 'doubtful loans' - the second of three categories of non-performing loans in the five-category loan classification system, just ahead of 'total loss' - last Saturday. Winning bids for the assets, which were divided into 35 pools along geographical lines to ensure that each of the country's four asset managers gets a piece of the action, were to be announced on Sunday. The central bank, which has been co-ordinating the auction and will provide financing for the cash-strapped asset managers to pay for the loans, told participants of the delay on Friday without giving a reason, sources said yesterday. The sources said the delay was in response to requests by some asset managers for more time to conduct due diligence. Some managers had also argued that some of the assets should have been classified as 'total loss' and moved to China Huarong Asset Management along with 246 billion yuan of similar assets last month. The central bank did not give a new timetable for the sale but asked the asset managers to settle the transactions by the end of this month - in time for ICBC to include its cleansed balance sheet in its first-half results, effectively limiting the delay to one week, a source said. 'If the transactions are completed by the end of this month, ICBC's non-performing loan ratio will fall from 16 per cent to 2 per cent to 3 per cent,' he said. 'Otherwise, the impaired loan numbers on its books will not look good.' Last year's sale of 278.7 billion yuan of doubtful loans by Bank of China and China Construction Bank to China Cinda Asset Management was also timed to meet interim result deadlines, allowing the lender to report a better asset quality in listing documents. ICBC is working towards stock-market offerings following a massive financial restructuring. It had doubtful loans valued at 460.59 billion yuan at the end of 2003. Removal of the loans in the 'total loss' and 'doubtful' categories on its books that year - the latest year for which its annual results have been made public - would have pared its non-performing loan ratio to 2.16 per cent from 21.24 per cent.