On China's State-owned Commercial Banks' Bad Assets Disposal Laws

According to the commitments made while China joined the World Trade Organization (the"WTO"), our country's banking industry has further opened up to the outside world. Under the context of the globalization of the world's economy, our local banking industry is undergoing the process of transforming state-owned banks into stock enterprises in order to face the fierce market competition. In line with the shareholding transformation of our local state-owned commercial banks, we have undertaken a great of deal of work regarding the disposal of the Non-Performing Assets (the"NPAs").Since 1999, when the four major national Asset Management Corporations (the"AMC") namely Xinda, Hua'rong, Dongfang, Changcheng were set up to dispose the NPAs, our country has made a great progress in disposing NPAs, but up to will it be the end 2005, four major state-run commercial banks five categorized NPAs remaining sum of requirements up to about 107,248 billion yuan, we still have a long way to go to accelerate NPAs to handle, improve the quality of the assets and show particularly urgently in an all-round way.This text further studies the legal problems arising from the process of disposing of the NPAs. Firstly, the summarizations of NPAs of the state-run commercial bank include the definition of NPAs and the state-run commercial bank, the cause of formation of NPAs, the critical of NPAs, and so on. Secondly this part introduces Unite States, Japan and Korea experiences on handling NPAs. Thirdly, this text concentrates on analyzing the legal problems in AMC handling NPAs, using foreign capital, NPAs backed securities etc. Fourthly, some suggestions to take precautions against financial risks for the state-own commercial bank, reduce the non-performing assets rate.