China adds a fifth debt manager as bad loans soar to decade high - South China Morning Post

China has given the green light for China Galaxy Asset Management to begin operations, making it the fifth national asset management company in the country's banking industry and the first to be established in more than two decades. According to a statement published on the website of the China Banking and Insurance Regulatory Commission, the Beijing-based firm is capitalised at 10 billion yuan (US$1.5 billion). The AMCs are tasked with processing and disposing of non-performing assets taken from the books of the country's state-owned banks.

The approval comes as the banking system braces for a record spate of corporate defaults and bad loans caused by the coronavirus pandemic. Although China's economy has returned to growth and is the only major economy to expand this year, that recovery has come at the expense of its banks, which have been instructed to give borrowers more flexibility to weather the downturn. The task facing the AMCs has taken on added urgency as the pandemic weighs on consumption and dampens economic growth.

Data released by the regulator show that outstanding non-performing loans at China's commercial banks rose to 2.8 trillion yuan by the end of the third quarter, the highest level since at least March 2009. Supplemental coverage has also reported rising consumer loan defaults and banks selling non-performing loans through bond-like securities and the credit-assets market as part of efforts to offload bad debt.