China eyes expansion of bad loan ABS

Regulators look set to give more commercial banks the option of securitising their bad loans this year. But the move could weaken asset quality in the market.

Chinese regulators opened the door to the securitisation of non-performing loans last year, giving six of the country’s biggest banks a chance to move struggling loans off their balance sheets.

The country’s banking regulator, the China Banking Regulatory Commission, is now poised to give the market an even bigger push.

The CBRC will this year open up the market to 12 banks, doubling the number of institutions with permission to sell NPL securitisations, according to a senior banker at one of the state-owned banks given permission to sell a deal last year. This figure could not be confirmed elsewhere, but other bankers confirmed an...

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