China's resolution of its bad loan problem through AMCs is a Great Leap Forward

The non-performing loans of Chinese banks has been nagging at the back of investors'' minds for months. But the establishment of the asset management companies brings in asset recovery professionals for the first time in China''s recent history.

In many ways the AMCs represent a profound generation shift in the attitude of the authorities to the problems of NPLs, estimated at $500 billion or 50% of GDP, and the results so far are encouraging.

Huarong AMC, twinned with the Industrial and Commercial Bank of China recently announced it had achieved a cash recovery rate of 32.5% last year after disposing of bad assets with a book value of RMB 23.21 billion $2.83 billion.

Great Wall, twinned with the worst performing bank, the Agricultural Bank of China, achieved a cash recovery rate of 24% from a nationwide auction of RMB 4.8 billion in December. Cinda, twinned with China Construction...

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