Great Wall Seeks Bidders for Record $18.1 Billion Bad-Loan Sale
Nov. 25 (Bloomberg) -- China started its biggest sale of bad loans, inviting Citigroup Inc., Morgan Stanley and other companies to bid for assets valued at $18.1 billion, more than four times the total sold so far to overseas investors.
Great Wall Asset Management Corp., which disposes of non- performing loans for Agricultural Bank of China, is selling all its distressed assets, with a face value of 150 billion yuan, the company said on its Web site. Overseas investors previously purchased loans in China valued at 33 billion yuan ($4 billion).
Clearing bad loans is essential for Chinese banks as the nation prepares to give overseas competitors greater access at the end of 2006. By Sept. 30, China's four state-owned asset managers had disposed of 31 percent of the 1.9 trillion yuan of loans they collected from the nation's four largest banks since 1999, according to the China Banking Regulatory Commission.
``They want to speed up the resolution of bad loans before China fully liberalizes and opens up for foreign banks in 2007,'' said Arthur Lau, a Singapore-based analyst at Barclays Capital. ``Because of the agricultural nature of the loans, it's hard for them to realize a high recovery rate.''
Bids are due in the first week of January, Great Wall said, without disclosing whether it had hired an adviser. Agricultural Bank is the smallest of China's four big state-owned banks.
Great Wall had recouped 10.6 percent of the face value of its loans as of Sept. 30, according to the banking regulator, compared with a recovery rate of more than 20 percent at the three other agencies. The nation's 15 biggest banks hold about 1.7 trillion yuan of bad loans, according to the regulator.
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