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Chinese banks setting up AM units.

Global Banking News-November 24, 2016--Chinese banks setting up AM units

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Global Banking News - 24 November 2016

Chinese state-owned banks have started to establish their own asset management arms to conduct debt-to-equity swap business for their peers.

The move suggests progress in handling soured bank loans. Agricultural Bank of China Ltd (AgBank) (601288.SS) (1288.HK), considered to be the country's third largest lender, said that it would set up a fully owned subsidiary named ABC Asset, to conduct debt-to-equity swap business. It will have a registered capital of CNY10bn.

ABC Asset's business includes acquisition of debt assets, converting debt into equity, holding, managing and disposing equity in debt-to-equity swap enterprises, according to the statement.

The bank said that the plan would need further approval from authorities. Setting up an asset management subsidiary would help banks to separate their debt-to-equity operation from the normal business operations.

New guidelines released by State Council in October encourage banks to transfer loans to external agencies, which will then convert the loans into equity.

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Publication:Global Banking News (GBN)
Date:Nov 24, 2016
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