China's State-owned Commercial Banks' Bad Assets, The Restructuring Mode

Since 90s, the frequency, virulence and global spread of financial crises in the world have led to the depression and financial difficulties of several countries. All the crises confirmed that financial risks would threaten and challenge the steady development of a country and the financial field. Although China is under the pressure of possible financial crisis, we have realized the seriousness of the crisis and the importance of maintaining a healthy financial system. China has experienced several banking events of insolvency and bankruptcy, such as the failures of Hainan Development Bank and Guangdong International Trust and Investment Corporation. Now the banking problems of big-sized bad assets became the focus of our nation and the overseas. Our government and the state-owned banks have made the same decision to deal with the bad assets, but the task needs great efforts, we are forced to find the appropriate method. The working of Cinda Asset Management Corporation, formed on April 20,1999, and the other three asset management corporations showed that our strategy to restructure the bad assets of state-owned banks have been launched. After the opening of the four asset management corporations, they were paid great attention. According to the situation of their working, we find that many key problems have to be solved. The author's aim to write this thesis is to do some detailed research of these problems and put forward some beneficial advice. This thesis includes four chapters. The first chapter is to analyze the problems of bad assets of China state- owned commercial banks. The author introduces the character and the reasons of the formation of the bad assets and point out the condition of solving problems. The second chapter is to introduce the good experience of several countries having solved the bad assets successfully, and put forward the method that we should use. The third chapter is to analyze the working system of the asset management corporations, and put forward the measures to solve several critical problems: buyout of bad assets, valuation of bad assets, settlement of bad assets, etc. The fourth chapter is to give some advice of improving the inside and outside environments of the asset management corporations.