China's State-owned Commercial Banks Non-performing Assets Disposal Of Several Legal Issues Research

Along with the Chinese financial industry’s comprehensive opening to the outside world, the domestic financial market will integrate with the global financial system in a greater degree, and the influx of foreign banks and foreign financial institutions will be intensifying, our state-owned commercial banks must face an unprecedented steep competition and challenge inevitably. In order to enhance the state-owned commercial bank’s competitive power, our government has utilized various ways to dispose of those bank’s large amount of bad assets, and has made some progress. Although our government has released a series of laws, rules and regulations in regard of disposing bad assets, bad assets keep increasing, the problem still persists. That indicates that bad assets handling is a long-term task, the legal system on bad assets handling is still flawed and inadequate, consequently in real world operations, people frequently can not find clear, relevant guidelines in the existing laws and regulations when dealing with bad assets.This thesis analyzes the current status and causes of bad assets of our state-owned commercial banks, focuses on researching legal issues in disposing bad assets, in conclusion, this thesis proposes that, in order to prevent future bad assets and resolve exiting bad assets issues, it is essential to strengthen and safeguard the bad assets handling from a legislative perspective, and a effective legislative system should be developed based on China’s national condition, while it is very helpful to reference and integrate other country’s established financial regulations and rules in dealing with bad assets, this is an national joint effort, which needs to integrate all relevant public and private sector’s resources. Only when the bad assets are handled properly and successfully, it will be possible to promote and improve state-owned banks reform, to safeguard the financial industry’s healthy and orderly development, and to reduce financial risks.This article primarily covers the following topics:Introduction:practical significance of this study, main contents of this thesis, and description of research technique.The first chapter:This chapter introduced state-owned commercial bank bad assets’ connotation and identification, analyzed state-owned commercial bank bad assets’ present situation and the origination from different levels, and discussed the practical significance in properly handling bad assets based on China’s actual national conditions.The second chapter:Performed comparative analysis on how overseas institutions handle their bad assets, introduced and analyzed the US, South Korea, Poland’s legal regime arrangement and it’s effect in handling bad assets, and summarized various countries’ legal experiences in handling bad assets.The third chapter:conducted research on legal issues of state-owned commercial banks’ bad assets handling, focused on 4 major legal issues including disposing of bad assets, converting debts to stock shares, utilizing foreign capital in disposing of non-performing assets, and asset securitization in China’s major financial asset management companies. At the end of this chapter, some ideas and suggestions are presented based on those actual operations.The fourth chapter:Proposed legal measures in dealing with non-performing assets of state-owned commercial banks:formulate independent " corporation law on financial asset management corporations", establish sound legal system on debt-to-stock convertion, consummate regulations on asset securitization, build up social credit system. With those measures bad assets handling can have solid legislative safeguard..Concluding remarks:Summarize major view points resulted from this study..