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Developing the Asian Markets PRC Experience

Developing the Asian Markets PRC Experience. David Kidd Allen & Overy 11 November 2003. ALLEN & OVERY. PRC NPLs - the story so far. AMCs (Cinda, Huarong, Great Wall, China Orient) established in 1999 1.4 trillion yuan (US$170 billion) transferred by ICBC, BOC, CCB and ABC

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Developing the Asian Markets PRC Experience

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  1. Developing the Asian MarketsPRC Experience David Kidd Allen & Overy 11 November 2003 ALLEN & OVERY

  2. PRC NPLs - the story so far • AMCs (Cinda, Huarong, Great Wall, China Orient) established in 1999 • 1.4 trillion yuan (US$170 billion) transferred by ICBC, BOC, CCB and ABC • To date 21.5% sold by AMCs • “NPLs cloud Big Four banks” - 6.11.03 ALLEN & OVERY

  3. Resolution issues • Legal framework • State ownership • Real estate • Restructuring culture ALLEN & OVERY

  4. Legal framework • 1986 Trial Bankruptcy Law • 1991 Civil Procedure Law • 2002 Supreme Court interpretation • New law in 2004? • GITIC landmark (cf GDE) • Judiciary ALLEN & OVERY

  5. State ownership • PRC a socialist centrally planned economy • Approval processes are slow • Move towards private ownership and improved corporate governance • Role of SOEs in employee welfare ALLEN & OVERY

  6. Real Estate • All land owned by state (urban) or collectives (rural) • Allocated/Granted/Leased • Security over tangibles • Enforcement slow • Employee rights ALLEN & OVERY

  7. Restructuring experience • GDE/FJE/ITICs/Zhu Kwan • Government support after GITIC • Inertia, indecision and limited local experience (but no dominant family interests) • Must combine international experience with local knowledge through strong servicing vehicles ALLEN & OVERY

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