Will NPLs haunt Bank of China HK and a future US listing?

Pages 213-215 in the Bank of China HK prospectus are definitely worth reading.

One interesting aspect of the Bank of China Hong Kong IPO is the manner in which it has transferred the bulk of the non-performing loans to its parent. It may well be that complications in this process were one of the primary reasons for cancelling its US listing.

The Bank of China has readied its Hong Kong subsidiary for IPO by taking much of the rubbish off its balance sheet and putting it into vehicles it owns.

This process began in 1999 when HK$26.9 billion $3.45 billion worth of loans were injected into Zhong Gang, a wholly-owned subsidiary of Bank of China. It paid its Hong Kong subsidiary HK$21.8 billion for these dud...

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