LENDING & CREDIT | Staff Reporter, China

China to let commercial banks sell bad loans: report

As much as $155b of non-performing personal loans could be offloaded.

China plans to allow some commercial banks to sell soured personal loans to distressed asset managers as soon as this month, reports Bloomberg, based on accounts from sources familiar with the matter.

The move will allow Chinese banks to offload as much as $155b of non-performing personal loans, according to an estimate by research firm Financial Regulation & Law.

The country’s total bad loans have climbed to a 17-year high as of 30 September amidst the pandemic and eroding banks’ capital.

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At a December meeting by the official credit assets transfer center, banks and state-run bad-loan managers were asked to accelerate preparations to ensure a smooth start of the trial program in January, sources said.

Details of the trial are not yet finalized and still subject to approval by the China Banking and Insurance Regulatory Commission, they shared.

Industrial & Commercial Bank of China could be the first seller, other people said.

Here’s more from Bloomberg.

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