Bank of China Moves To Cut Bad Loan Portfolio
Faced with pressure from the China Banking Regulatory
Commission, the Bank of China is moving to take some US$2
billion worth of non-performing loans off its books before
it seeks to be listed. This would be the first move among
China's four leading
banks to cut their losses of non-performing loans.
Exact figures for the bad loans are not available, but
they are believed to be between US$350-750 billion.
Bank of China is believed to have appointed UBS to auction
the loans, which are mainly related to property loans
in Hong Kong. Hong Kong property prices have fallen by
about 60 percent since their peak in 1997.
The banks hope to get the NPLs off their books before
going public. The Chinese government has been putting
extra pressure lately through the China Banking Regulatory
Commission to clean up their finances. Although the CBRC
was established only recently, the government has given
it almost extraordinary authority to push financial reforms.
The main driving force behind this impetus is to get
the banks in good shape for going public, as foreign banks
will enter and compete in the Chinese retail banking sector
by 2006, under terms set by China's accession to the WTO
(World Trade Organization) in 2001. Many foreign
banks are already positioning themselves for the opening
of the China market.
Pudong Development Bank Issues First Yuan-Denominated
Credit Card
Shanghai's Pudong Development Bank has become the first
Chinese bank to issue a yuan-denominated credit card.
Previously, all cards issued in China were debit cards,
which only allowed users to make deductions from their
pre-paid bank accounts.
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