Study On Special Disposal Of State-owned Commercial Banks' Non-performing Assets

During the period of economic transition, sorts of political and systematic causes led to the huge amount of non-performing assets (NPLs) in the body of state-owned commercial banks. It is neither reasonable nor realistic to ask the banks to dispose such NPLs all by themselves. For the state-owned commercial banks, to promote the shareholding reform and improve their competitive power under open conditions, it is required to accelerate the process of their special disposal for NPLs.In 1999, by establishing four asset management corporations, the Chinese government peeled off about RMB 1.4 trillion in all from the state-owned commercial banks. However, because of the considerable basis, other special disposal arrangements must be followed up so as to fundamentally resolve the issue of NPLs of the state-owned commercial banks.By synthetically using the comparative, empirical and case-study methods, the paper discusses the effect of the two disposal ways for Chinese state-owned banks'NPLs, based on the successful experience from abroad. Finally, in light of national conditions, the paper proposes four countermeasures to accelerate the special disposal progress, including establishing the cost-sharing system, improving the legal environment, competitively using the means of "internal peeling-off", "market selling", "foreign-related restructuring" and "quasi securitization ", and stopping the NPLs from the origins.