Chinese banks to establish debt swaps companies
(25 November 2016 - China) China's five largest state-owned banks are to set up asset management companies (AMCs) to undertake debt-for-equity swaps, financial publisher Caixin has reported.
The five state-run banks are Industrial and Commercial Bank of China, Agricultural Bank of China (AgBank), China Construction Bank (CCB), Bank of China and Bank of Communications.
Each asset manager is expected to be capitalised at around 10 billion yuan (A$1.94 billion), sources told the publication.
AgBank, the country's third-biggest bank by assets, said in a filing to the Shanghai Stock Exchange that it would set up a wholly-owned asset management division to undertake debt-for-equity swaps.
Last month, China's banking regulator called banks for a meeting to discuss establishing asset management subsidiaries to manage debt-to-equity swaps shortly after the State Council published guidance for reducing corporate debt by encouraging debt-for-equity swaps.
China's businesses sit on US$18 trillion in debt, which is equivalent to about 169 percent of gross domestic product.
CCB, the country's second-biggest lender, has announced seven debt-reduction deals with a total value of 83 billion yuan and is talking with foreign investors to take part in the deals, reports said this week.
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