China Huarong Asset Management Corporation, one of four State-owned asset management companies (AMCs), opened its new joint venture in Beijing yesterday.

 

The venture, Rongde Asset Management Co, is the first Sino-foreign asset management company focusing on the purchase, management and disposal of non-performing assets.

 

China Huarong holds a 51 percent stake in Rongde, which has a registered capital of 1.788 billion yuan (US$223.5 million).

 

Cathay Capital Co, a joint venture between Deutsche Bank and the American International Group, owns a 35 percent share in Rongde.

 

And the International Finance Corp (IFC), the private arm of the World Bank, holds the remaining 14 percent.

 

China Huarong said it began seeking foreign investors from September 2005 and received approval for the joint venture in the first half of 2006. Zheng Wanchun, vice-president of China Huarong, will chair the new venture.

 

China Huarong and the other three State-owned AMCs China Cinda, China Orient and China Great Wall were first set up in 1999 to dispose of 1.4 trillion yuan (US$175 billion) in non-performing loans from the four State-owned commercial banks.

 

The four AMCs had disposed of a combined 839.75 billion yuan (US$105 billion) in non-performing loans by the end of 2005.

 

All four aim to evolve into market-oriented financial institutions once they have completed their initial administration assignment by the end of this year.

 

China Cinda set up a fund management joint venture a month ago with Colonial First State Group (CFSG), a subsidiary of the Commonwealth Bank of Australia, to expand into other financial services.

 

"For Huarong, the establishment of Rongde AMC is an important step to explore new asset management models and to transform into a more commercial-oriented business," said Ding Zhongchi, president of China Huarong.

 

"China Huarong has established a nationwide network, accumulated a wealth of experience in dealing with non-performing assets and built a professional team, while our foreign partners will bring us advanced experience in management, investment and risk control," he said.

 

Analysts say Rongde will help attract capital investment in the disposal of non-performing assets in China and build a unified non-performing assets market.

 

(China Daily August 30, 2006)