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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: RealMuLan who wrote (5169)4/28/2004 1:12:05 PM
From: RealMuLan  Read Replies (1) of 116555
 
Bank of China delays landmark bad-loan sale
By Francesco Guerrera in Hong Kong and James Kynge in Beijing
Published: April 27 2004 21:53 | Last Updated: April 27 2004 21:53


Bank of China has been forced to delay a landmark sale of up to Rmb6bn ($724m) in bad loans to foreign investors in another setback for efforts by Chinese state-owned banks to clean their debt-laden balance sheets ahead of overseas listings.


Bankers close to the situation said fears that the Chinese authorities could have objected to a sale of the non-performing loans at too low a price had prompted Bank of China to "delay indefinitely" the non-performing loan (NPL) auction, originally expected this month.

The postponement of the deal, the first direct auction of NPLs by one of the big four state banks, rather than by one of their affiliated asset management companies, is a sign of growing difficulties in reducing about $300bn in bad loans held by China's financial institutions. Last month, the Financial Times revealed a sale of NPLs with face value of Rmb4.3bn from China Construction Bank, another state bank, to Morgan Stanley had been blocked by Beijing because the price was deemed to be low.

A banker involved in the auction said: "The setbacks for the China Construction Bank and Bank of China deals suggest the market for disposing of NPLs in China is in trouble. Despite all the interest from foreign investors, not much has been done and we don't expect much to happen in 2004."


news.ft.com
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