China approves second batch of local asset management companies

The mainland banking regulator has approved a second batch of asset management companies tasked with cleaning up debt at the city and provincial level, bringing the number of formally approved "bad banks" to 10.

The China Banking Regulatory Commission cleared governments in Beijing, Chongqing, Tianjin, Fujian and Liaoning to set up AMCs, state-backed Economic Information said on its website yesterday. The second wave of approvals comes after Zhejiang, Jiangsu, Anhui, Guangdong and Shanghai established locally controlled firms in July.

A notice on company restructuring posted on the website of the State-owned Assets Supervision and Administration Commission of the State Council said an asset manager set up in the centrally controlled municipality of Tianjin was the mainland's sixth.

The Fujian branch of Sasac also confirmed the establishment of an asset management company in the provincial capital Fuzhou.

The companies are modelled after four centrally controlled asset managers, set up in 1999, that bought 1.4 trillion yuan (HK$1.76 trillion) in bad debt from the country's four biggest banks.

The local AMCs will have a similar role in buying up bad debt, but this time from local governments, some of which are struggling with high levels of non-performing loans.