China Cinda Asset Management Corporation, one of the four State-owned asset management companies (AMCs), pioneered the first fund management company owned by an AMC yesterday, paving the way for asset managers to develop multifunctional financial services in the future.

 

The first fund management company held by a State-owned asset manager, namely the First State Cinda Fund Management Co Ltd, is a Shenzhen-based joint venture between China Cinda and Colonial First State Group (CFSG), a subsidiary of the Commonwealth Bank of Australia.

 

China Cinda invested 54 million yuan (US$6.75 million) in a 54 percent stake of the fund company, while CFSG contributed 46 million yuan (US$5.75 million) for the leftover 46 percent.

 

"The establishment of First State Cinda signals that financial asset management companies have reached out into the fund management industry and made their first attempt at developing multi-functional financial services," Tian Guoli, chief executive of the China Cinda, said during the opening ceremony held in Beijing yesterday.

 

The fund company would be busy with talent recruitment in the following months and aims for profit gaining within three years, according to He Jiawu, director of First State Cinda

 

"China Cinda has advantages in client resources and possesses a nationwide network, while our foreign partner will bring us advanced experience in talent training, management and product design," He said.

 

The four AMCs, namely China Cinda, China Orient, China Huarong and China Great Wall, were first set up to dispose of large volumes of non-performing loandetached by the four State-owned commercial banks. The four companies had disposed of a combined 839.75 billion yuan (US$105 billion) in non-performing loan by 2005.

 

However, by the end of 2006, the four State-owned AMCs will finish their administrative assignment of disposing of non-performing loans and will have to fight for survival by transforming into completely commercial financial institutions.

 

The four AMCs have made great efforts to expand from their traditional bad asset disposal business to include other financial sectors including investment banking, asset securitization, brokerage and fund management.

 

China Cinda is the first professional company established in China to deal with non-performing financial assets. The company managed more than 300,000 accounts detached from banks, with total financial assets of more than 1 trillion yuan (US$125 billion).

 

Now it has become the first to transform itself from a bad asset manager to a multi-functional financial group dealing with various trades.

 

It received approval from the China Securities Regulatory Commission to set up the first AMC-owned securities firm, Cinda Securities, earlier in June. According to Tian, the securities company is expected to open within the year and will be solely owned by China Cinda on the basis of restructuring two poorly performing brokerages: Han Tang Securities and Liaoning Securities.

 

The First State Cinda had applied to the China Securities Regulatory Commission to launch its first fund, which will mainly invest in the stock market and is likely to be launched in September, He said.

 

(China Daily July 21, 2006)