China Construction Bank (CCB) held an auction weeks earlier this
month for its offset assets, involving about 2,000 items totaling
four billion yuan (about US$48.3 million), belonging to its 24
branch banks respectively, through some 20 auction agencies in 24
cities including Shanghai, Guangzhou, Chongqing, Tianjin, Harbin,
Xi'an and Wuhan.
This was the first time for a state-owned commercial bank to
auction offset assets on such a large scale. "CCB now has bad loans
totaling about 280 billion yuan (US$33.82 billion)," explained Yang
Xiaoyang, general manager of the bank's Asset Maintenance
Department. "But, we plan to cut 50 billion yuan (US$6.04 billion)
of them each year for the next five years so as to reach the goal
of reducing the bad loan rate below ten percent from the present
18.14 percent."
Yang said this was of vital importance for CCB in its drive to
become the leader among the four state-owned commercial banks in
the next three to five years.
The trial assets auction was an innovation in bad loan management
for CCB based on its advantages in information and resources. The
bank will hold regular offset assets auctions in spring and autumn
each year and make it an important way of managing offset assets.
Foreign and domestic investors can obtain free information on
auctions at www.ccb.com.cn.
China Construction Bank had received offset assets worth 21.626
billion yuan (US$2.62 billion) by December 31, 2001, among them 75
percent, or 16.309 billion yuan (US$1.97 billion), were identified
as being capable of being sold or converted to cash. Those
auctioned off in June were considered the blue chip part of the
assets. Nevertheless, "the price was only 40 or 50 percent of
original book value, and in some cases was down to below 30
percent," said Yang.
Yang expressed his hope of cooperating with the four major
state-owned assets management companies and the other three
state-owned commercial banks (Industrial and Commercial Bank of
China, Bank of China and Agricultural Bank of China) in auctioning
off bad loans in future.
(china.org.cn by James Liu, June 29, 2002)
