China’s CBRC Sets Requirements For Establishing Local Asset Management Companies

China Banking Regulatory Commission (CBRC) published on its website a document detailing the basic requirements for setting up local asset management companies in China’s provinces and cities.

China currently has four state-owned asset management companies at the central government level.

Established in the late 1990s, they took over and manages the non-performing loans from the country’s "Big Four" state-owned banks: Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China.

The latest document says that any local government level asset management companies must have a minimum registered and actual capital of RMB1 billion.

The companies must also have directors and senior management teams that are qualified to manage distressed assets.

Lastly, they need to have strong corporate governance, internal controls and risk management systems.

Previously, CBRC said that any Chinese province or city in principle can only authorize or establish one local level asset management company.

In November, Los Angeles-based Oaktree Capital Group, the biggest distressed debt investor globally, announced that it will establish a joint-venture fund with China Cinda Asset Management Co. to invest in China’s distressed assets.

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