Chinese AMCs look for permanent role
Yang Kaisheng, president of China's Huarong Asset Management, likes to compare non-performing loans withice-lollies as time passes, their value tends to melt away.
However, that is certainly not how Mr Yang views Huarong, one of four asset management corporations (AMCs) that were launched by the Chinese government in the late 1990s todeal with the Rmb1,400bn ($169bn) of the bad debts burdening the country's biggest four banks.
Originally intended as one-off asset vehicles to be wound up within a decade, AMCs now want to transform themselves into permanent profit-oriented financial institutions able to compete with investment banks in a wide range of services.
Executives are already considering moving towards possible public listings or inviting strategic investments by foreign companies with the encouragement of Chinese banking regulators.
“Huarong is in a process of transformation and we will unceasingly try to expand into new areas of business,” says Mr Yang.
Other AMCs share the same ambitions.
Chen Xiaozhou, deputy chief executive of Cinda Asset Management, talks of the original task of cleaning up bad loans by government fiat as a past “policybusiness”.
“This year we entered a new phase, that of commercialisation,” Mr Chen says.
The change in role of the AMCs is likely to have far reaching implications for the development of China's market in non-performing loans (NPLs) and other problem assets.
It could also spell even greater competition for foreign institutions that have so far won only a small share of the Chinese NPLs business. Already, the AMCs are active in new areas. In June, Cinda won an auction for Rmb280bn worth of NPLs from Bank of China and China Construction Bank, marking the introduction of competition between AMCs and an effort to introduce market mechanisms to NPL acquisitions.
Huarong has been entrusted with the management of the troubled D'Long corporate group, a deal that Mr Yang says puts it in the business of handling privately-owned problem assets.
The AMCs are also pushing into sectors such as consultancy and underwriting, though Huarong and Cinda insist that NPL disposal is likely to remain the core of their activities.
Questions still hang over the AMCs' new lease of life, however. To some it seems a triumph of bureaucratic survivalism that demonstrates the difficulty of scrapping state organisations, even ostensibly temporary ones.
Commercialisation will also require refunding the AMCs, which have no hope of repaying the bonds that they issued to fund the purchase of banks' NPLs at face value in 1999.
And the AMCs have been criticised for the recovery rates they have achieved though Mr Yang says a cash recovery ratio of 20.34 per cent is entirely satisfactory given that Huarong took on the worst assets held by the sprawling Industrial and Commercial Bank of China in 1999.
The wider role of the AMCs may fuel foreign concern about the limited opportunities overseas investors have had in the Chinese NPL market.
Some overseas investors see expected sales by Cinda of repackaged assets from the June auction as a way back into the market. But they are now likely to face competition from the other state AMCs.
Mr Chen of Cinda argues that the biggest obstacle to foreign involvement in NPL disposal has been the high rates of return they demand.
AMCs' executives say recent streamlining of government approvals should make deals involving overseas institutions easier.
Indeed there is likely to be greater opportunity for co-operation with the new-look AMCs Citigroup has already announced the US$109m purchase of a stake in Silver Grant, a Hong Kong-listed company controlled by Cinda.
That may be just the start. Mr Chen says that managers have already considered listing the company, though such a move would be some way off.
Foreign investors might also be encouraged by the underlying logic of making the AMCs into permanent institutions the awareness that problem assets are going to be a long-termchallenge.
Despite dramatic improvements in banking regulation and sweeping reforms at banks, the stock of NPLs remains large and analysts say banks are likely to generate new bad loans at a relatively high rate.
Ice-lollies may melt, but Huarong and its peers are unlikely to have problems finding new ones to suck.
中国资产管理公司期待“转正”
华融资产管理公司(Huarong Asset Management)总裁杨凯生喜欢把不良贷款比作冰棒，因为随着时间流逝，它们的价值往往会消融。
然而，这当然不是杨先生对华融的看法。中国政府在90年代末成立了四家资产管理公司，以处理四大国有银行背负的1.4万亿元人民币（合1690亿美元）坏账，华融就是这四家资产管理公司之一。
四家资产管理公司原本是作为临时的资产管理机构，将在10年内关闭。如今这些资产管理公司希望把自身转变成固定的，以盈利为目的的金融机构，能在广泛的服务领域与各家投资银行展开竞争。
在中国银行业监管机构的鼓励下，这些公司的高层已在考虑向公开上市或邀请外国公司战略投资的方向努力。
“华融正处在转型过程中，我们将不断进行尝试，向新的业务领域拓展，”杨先生说道。
其它资产管理公司也有着同样的雄心。
信达资产管理公司(Cinda Asset Management)副总裁陈孝周称，政府原本想让资产管理公司承担清理坏账的任务，而这个“政策性业务”已成往事。
“今年我们进入了一个新阶段，那就是商业化，”陈先生说。
四家资产管理公司角色的转变，可能会对中国不良贷款和其它问题资产市场的发展产生深远的影响。
对于至今只赢得中国不良贷款业务一小块份额的外国机构而言，这可能意味着更激烈的竞争。中国的资产管理公司在一些新领域已经很活跃。6月，信达在中国银行和中国建设银行价值2800亿元人民币的不良贷款拍卖中胜出，标志着资产管理公司之间已展开竞争，以及政府正努力在不良贷款的收购方面引入市场机制。
华融已被委托管理陷入困境的德隆集团(D’Long)。杨先生称，这笔交易使公司进入了处理私营企业问题资产的业务领域。
资产管理公司也在努力进入咨询和承销等领域，尽管华融和信达都坚称处置不良贷款可能继续会是它们的核心业务。
然而，资产管理公司的新生仍将面临一些疑问。在一些人看来，这似乎是官僚活命主义的胜利，证明要解散国有机构，哪怕名义上是暂时性的机构是多么困难。
商业化还意味着需要向资产管理公司再度注入资金，这些公司没有希望偿还它们发行的债券。1999年，它们发行这些债券筹集资金，用以按账面价值购买银行的不良贷款。
同时，这些资产管理公司还受到批评，称它们实现的现金回收率太低，但杨先生表示，鉴于华融在1999年接收的是规模庞大的中国工商银行最差的资产，20.34%的现金回收率是完全令人满意的。
中国的资产管理公司扮演更宽泛的角色，这可能会加剧国外投资者的担心，因为他们在中国不良贷款市场的机会已经很有限。
预计信达将出售重新包装过的来自6月拍卖的资产，一些海外投资者将此视为重返市场的途径。但它们现在可能会面临来自其它国有资产管理公司的竞争。
信达的陈先生认为，外国投资者参与不良贷款处置的最大障碍，是它们要求较高的回报率。
各家资产管理公司的高层表示，最近政府精简了批准手续，这应该会简化涉及海外机构的交易。
的确，与这些新面貌的资产管理公司合作的机会可能会更大一些。花旗集团(Citigroup)此前已宣布，购入香港上市公司银建国际(Silver Grant)价值1.09亿美元的股权。银建国际由信达控股。
这也许只是个开始。陈先生说，管理层已考虑让信达上市，尽管这还有待时日。
让资产管理公司变成永久性机构的根本逻辑，可能也会令外国投资者受到鼓舞。这种逻辑便是，中国政府意识到，问题资产将是个长期挑战。
尽管银行业监管取得了重大进步，银行业也正在进行全面改革，但不良贷款的存量仍然很大，而且据分析师们表示，各银行可能会以相对较快的速度继续产生新的坏账。
冰棒也许会融化，但华融及其同行可能不会有什么问题找到新的冰棒。
