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Trial Implementation of Non-performing Bank Asset Securitization: Problems and Policy Options(No.13, 2018)

By Wang Gang, Research Team on “The Disposal of Non-performing Assets and the Transformation of Financial Asset Management Mode”, Research Institute of Finance, DRC

Research Report, No.13, 2018 (Total 5288) 2018-1-15

Abstract: The securitization business of non-performing assets is an important channel to improve the banking sector’s capability to dispose non-performing assets in a market-oriented and diversified manner and to rapidly activate the stock credits. Since the approval of relaunching the securitization of non-performing assets by the State Council in early 2016, 18 banks have been approved respectively on conducting the pilot projects, and a total of 76.8 billion yuan of non-performing assets have been disposed. Despite the major progress achieved, research findings show that there are some issues to be addressed relating to the pilot projects. First, the legal, accounting and taxation supportive policies remain to be further clarified in relevant details. Second, the banks are not that skillful in dealing with the disposition of non-performing assets and facts show they have paid high comprehensive costs. Third, the non-performing asset securities are untradeable on the exchange market, while the number of qualified investors is still limited, which affect the trading and disposal volume. Fourth, it is difficult to ascertain the price and value of relevant products. This paper has raised related policy options to resolve these problems.

Key words: non-performing asset securitization, trial implementation, problems, policy options