An Exploration On Using Foreign Capital To Participate In Disposing Non-performing Assets Of China's Financial Asset Management Corporation

In order to solve the increasing problem of bank non-performing assets, some countries established special institutions and adopted different strategies to dispose non-performing assets and dissolve financial crisis. Financial asset management corporation is the most characteristic institution. China has established four financial asset management corporations such as Cinda, HuaRong, Greatwall and Orient purchasing 1393.9 billion non-performing assets stripped off from four state-owned commercial banks including China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China. These measures lighten the burden on the four state-owned commercial bank and decline the proportion of non-performing assets. It is an important subject how should the financial asset management corporations accomplish to maximize the recovery value of non-performing assets and dispose the whole non-performing assets within six years. Among these non-performing assets, about eighty percent are stemmed from state and collective enterprise. It is obvious that fund is insufficient only depend on state public fund and state enterprise capital to dispose such huge non-performing assets. Financial asset management corporations should face to both domestic and overseas markets, and depend on both internal and foreign capital. On the basis of using the successful foreign experience, this paper discuss the way and pattern that financial asset management corporations should adopt to dispose the non-performing assets by using foreign capital.The paper is divided into six sections:Chapter one is introduction. In this section, the subject of the study is offeredthrough generalizing the background of four financial asset management corporations in China. Afterwards, it introduces the innovation of this paper, the method and frame of this paper in brief.Chapter two is the necessity and feasibility about disposal of non-performing assets which financial asset management corporations will adopt by using foreign capital. First, it defines several concepts. Then, it disserts the necessity that financial asset management corporations use foreign capital to dispose non-performing assets.Afterwards, the feasibility of using foreign capital to participate in disposal of non-performing assets is analyzed in theoretic and practical aspect.Chapter three is analyses the status quo about Chinese financial asset management corporations by using foreign capital. First, the status quo by using foreign capital is introduced. Then, it analyses the causes that affect the disposal of non-performing assets. Such as the obstacles of law and policy; non-developed capital market; dissymmetry and incompleteness of information; valuation and pricing of non-performing assets and etc are discussed.Chapter four is the experience and revelation from foreign asset management corporations. First, the experience from KAMCO, Danaharta, FRA and Slovakia are introduced. According to the successful experience, several revelations are summed up.Chapter five is the way and pattern by using foreign capital. In this section, it explores how to create favorable condition for foreign capital. Afterwards, it discusses the way and pattern by using foreign capital in detail. Such as external transfer and regroup of non-performing assets, joint Asset Management Corporation through international bidding and joint Fund Management Corporation, asset securitization and etc are discussed. At last, it explores other way and pattern by using foreign capital in brief. Such as cooperation with foreign intermediary institutions; sale or subrogation collection of bad debts; manage by lease and so on are mentioned. This section also analyses two positive cases such as BangBu generate plant reorganization of Cinda and international bidding of HuaRong that improve the above viewpoint.Chapter six is the conclusion and prospect.