21 5 2 amcs multiple roles

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Unformatted text preview: .................21 5-2 AMCs' Multiple Roles.............................................................................. 5-3 The Kinds of Assets in the Non-performing Loan Pool........................................ 5-4 Major Workout Approaches 5-4-1 Debt-Equity Swap............................................................................27 5-4-2 D iscounted Payoff................................................................................32 5-4-3 L oan P ool Sale....................................................................................34 5-4-4 Property Auction..................................................................................39 5-4-5 Securitization ................................................................................... 40 6 Unsolved Problems 6-1 Who Is Going to Bear All the Losses Eventually................................................... 6-2 M oral H azards........................................................................................ 42 43 22 24 7 Obstacles to the NPL Issue 7-1 China's Immature Capital Market.....................................................................44 7-2 AMC's Structure Problems - Competitions, Incentives and Skills..............................47 7-3 Legal Enforcement of Rights.......................................................................48 8 C onclu sion .............................................................................................. 50 Appendix I: Regulations on Financial Asset Management Companies........................52 Appendix II: Case Study-The Resolution Trust Corporation (RTC) and S&L Crisis........59 B ib lio g raph y .................................................................................................. 61 A b breviation ............................................................................................... .63 CHAPTER ONE: INTRODUCTION Banking systems play a central role in mobilizing and allocating resources in a market economy. This stands in fundamental contrast to a planned economy, where financial institutions play a largely incidental role in resource allocation. China is in the process of transitioning from a centrally planned to a market economy, with its banking system gradually evolving from a conduit of budgetary capital supply to a market-oriented modern banking system. During this process, non-performing loans accumulated rapidly in state-owned commercial banks (SOBs) as a result of policy lending, real estate bubbles as well as underdeveloped credit culture and business infrastructures. China's imminent accession to World Trade Organization (WTO) in addition to the 1997 Asian financial crisis called for an immediate reform of the deteriorating banking system. Four asset management companies (AMCs) were established to take on and dispose of a significant portion of NPLs from the four SOBs as well as to act as the turnaround managers for the loss-making state-owned enterprises (SOEs). A series of workout ap...
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This document was uploaded on 03/12/2014.

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