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)
