China Orient's non-performing asset business expands

BEIJING - The balance of the non-performing asset (NPA) business of a leading asset management company (AMC) stood at 218.69 billion yuan ($31.88 billion) at the end of June.

The figure is up 15.16 percent from the beginning of the year, said Chen Xiaokua, assistant president of China Orient Assets Management Co Ltd. It includes 106.82 billion yuan in non-performing financial assets, up 31.24 percent over the beginning of the year, Chen said.

China Orient plans to allocate 125 billion yuan in risk assets this year, all of which will be used to handle NPAs, he said.

By the end of 2018, the balance of the parent company's NPA business totaled 193 billion yuan, up 125.79 percent from the beginning of 2018, according to data on the company's website.

China's AMCs were created in 1999 in order to remove non-performing loans from banks' balance sheets and guard against financial crisis due to bad loans. The national-level AMCs include Cinda, Huarong, Great Wall and China Orient.

Banks are no longer the only source of NPAs for AMCs. Now China Orient also deals with the reorganization of individual problematic projects, crisis-hit companies and risky financial institutions. Its business includes both spot and forward NPA transactions.

China Orient has used multiple techniques to handle NPAs, such as debt restructuring, asset restructuring, debt-to-equity swaps, litigation, asset transfers and structured transactions, according to the company.