Operation And Development Of Asset Management Corporations In China

During the late 1990s in China, four asset management corporations (AMCs) were founded to deal with the distressed debt from national bank in the purpose of reducing financial risk. Over the past eight years, AMCs have made remarkable achievements and thus proved the efficiency of their operation not only in overfulfiling the task of distressed asset callback on time and protecting national asset within their capacity, but also in promoting banking industry reforms. However, as the deadline of distressed asset callback is close, the government began to set interim period for AMCs which forced them to face with the deep thinking about developing prospect and the problem of transformation.This study first briefly introduces the historical background on which distressed asset was formed and illustrates the importance of setting up AMCs in China. In the next section, based on the practical effect of disposition ways such as debt-to-equity swaps, restructuring and asset secuiritized, this paper shows the efficiency of AMCs and indicates successful experience as well as questions existed earning by AMCs during their treatment with distress asset. According to the development track of foreign AMCs. the paper presents the strong relationship between developing prospect of AMCs and financial market factors such as asset quality and marker requirement, ect. Concerned with the transforming problem in AMCs, the paper attempts to give a suggestion for AMCs, which have the adventage of asset management and experience in hadling a variety of financial products, about the strategic transformation to financial holding company, which may be helpful for the seeking AMCs.