Y 资产管理公司处置不良资产的模式研究

1 INTRODUCTION

1.1 The Background and Significance of Research

Since Asia Financial Crisis, Chinese government has been focusing on the stability of financial system. In China, the long-time planned economy system and integration of government  administration  with  enterprises  contributed  to  the  formation of highly coexistent  relationship  between  state-owned  enterprises  and  state-run  commercial banks.  Owing  to  the backwardness  of  production  facilities  and  techniques,  heavy burden  of  debt  and  maladjustment  of  market demand, many  state-owned  enterprises are struggling with vast loss, which causes many financial problems. We can see from the balance  sheet  of  some  state-owned  banks  that  a  large  amount  of  loans  of state-owned banks are difficult to withdraw due to some intricate factors.

To  guard  against  and  ride  out  financial  crises  radically,  to  solve  the  problems  of non-performing loans of state-run banks and to safeguard the reputation of state-run commercial banks and improve their international competitiveness, China has to build up a healthy and sustainable financial system on a basis of an objective judgment of current economic situation. Thus, the CPC and the State Council of China decided to found financial assets management companies in 1998 according to current situation of  China’s  economy  and  learn  advanced  experience  and  techniques  from  western developed countries. By doing so, the non-performing assets in state-run commercial banks  were  separated  from state-run  commercial  banks  and  disposed  specially  by asset  management  companies.  The  establishment  of asset  management  companies converts the relationship of debtor and creditor between previous state-run banks and enterprises to that between asset management companies and enterprises. This helps dispose  the  non-performing assets,  reduce  financial  risks  and  promote  the  financial reform  of  state-run  banks.  And  it  also  enhances international  competitiveness  of state-run  banks  in  global  financial  market and  reduces  the  debt  ratio  of  state-owned enterprises through debt-restructuring and transfer from debts to stocks. This is crucial for  state-owned enterprises  to  build  up  modern  enterprise  system  and  achieve  their revitalization.

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1.2 Thoughts and Methods of Research

Through  analysis  of  the  definition,  features,  causes,  history,  current  situation,  basic patterns  and  related problems  of  non-performing  assets  disposal,  we  compare international disposal methods with the disposal pattern of AMC Y on a macroscopic level. Then, we discuss the problems in the disposal of Company Y and put forward promotion strategies  on  a  micro  level.  And  we  also  propose  some  new  solutions  to improve  the  profit  ratio  of  assets disposal  and  accelerate  the  withdrawal  of  fund. Many scientific theories are applied in this research thesis such as literature reading method,  comparison  method,  method  of  investigation  and  survey.  The  collecting, reading  and analyzing  of  exhaustive  literature  materials  guarantees  the  validity  and profundity  of  the  information  mentioned in  my  research  thesis.  This  thesis  thesis incorporates  new  management  thoughts  and  practical  experience, making  the  whole thesis useful both in theory and practice.

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2 LITERATURE REVIEW

2.1 The Definition and Features of

Non-performing Assets Non-performing  assets  refers  to  the  those  bank  assets  that  stay  in  terrible  state  of operation and fail to create stable income for bank in time. Sometimes it also refers to those  assets  that  are  difficult to retrieve  principal.  In  fact,  non-performing  assets mainly consist of non-performing loans. These non-performing assets have following features:

1. Invalid mortgage loans and credit loans are the major part of non-performing assets. They have many flaws. It’s difficult to retrieve these loans. Many taxes are charged for  the  transfer  ownership  of  some  assets.  The  transfer have  to  go  through  many approval  processes,  costing  vast  financial  resources  and  human  resources  of  asset management companies.

2. Non-performing  assets  need  rapid  disposal.  The  faster  the  company  disposes  the non-performing assets, the less risks it will take and the less loss it will suffer. With the  passage  of  time,  it  becomes  more  difficult  to  retrieve these  loans.  And  large amount  of  state-owned  assets  will  sharply  depreciate  if  debtors  run  away  or  their business gets worsening or the real assets suffer from wear and tear. 

3. Non-performing assets are potential to appreciate. Some assets have bad qualities mainly  because  of  heavy  burden of  debts. While some are deeply influenced by the mal-distribution of financial resources under conditions of planned economy. We can say that though non-performing assets now stay in a terrible situation, they still have huge potential to grow better and revitalize.

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2.2 Causes of Non-performing Assets

There  are  diversified  causes  of  non-performing  assets  in  state-owned  commercial banks due to complicated political and historical background. These causes are both external and internal and they can be roughly divided into following categories.

2.2.1 External Causes

1. Central government used to have a strong intervention power in national economy and  it  would  manipulate  the normal  operation  and  decision-making  of  many state-owned enterprises including state-owned banks. State-owned commercial banks are  the  main  targets  of  macro  economic  control.  In  fact,  central  government  is  the owner of these commercial banks and also the administrator. It has a dual mission to exercise macro control over national economy and to operate these commercial banks. There tends to be much intervention of government in the business of banks due to the significance  of  banks  to  national  economy.  At  the  same  time,  loans  of  state-owned enterprises are  overwhelming  in  the  non-performing  assets  of  banks.  Managers  of these  state-owned  enterprises  lack  the motive  to  make  more  profits  when  they  have their vested interest and can often have fiscal guarantee from central government. So these enterprises easily become insolvent or go bankrupt when the suffer from serious market  crisis and the  central  government  doesn’t  have  enough  power  and  money  to save all the state-owned enterprises. They cannot pay back the loans and the interest. They  are  serious  debt-ridden.  What’s  more,  state-owned  commercial banks  are  also interfered  by  local  governments.  State-owned  banks  are  designated  to  provide  some loans with fiscal subsidies to state-owned enterprises. These loans are put into simple reproduction or just become part of assets of these enterprises. So thees state-owned banks  cannot  find  their  target  market  and  clients,  with  the  intervention of all-level government. They have to blaze of trail of marketization.

2.  The  asymmetry  of  information  and  the  imperfection  of  social  credit  system  have caused  huge  risk  of corporate  ethics  and  misled  commercial  banks.  State-run commercial  banks  depend  on  external  information  to evaluate  the  personality  and financial  condition  of  the  borrowers  to  decide  whether  to  issue  the  loan.  Given that the social credit system is incomplete in China, the borrower enterprise always forge their  financial  information  to get  loans  from  banks.  To  make  things  worse,  the borrowers information of different banks can not be shared and these borrowers take advantage of this information asymmetry to get more loans than they can pay back. Owing to this information asymmetry, state-owned banks find it difficult to supervise the  money  flow  and  use  of  these  loans  and to  inspect  and  assess  the  assets  projects where loans are put into. In addition, borrowers(often refer to state-owned enterprises) often  breach  the  signed  agreement  when  they  apply  for  loans.  They  often  find loopholes  of related laws  and  avoid  or  alleviate  the  punishment  because  they  are state-owned.  How  can  the  government  punish  a state-owned  enterprise  for  its incapability  to  repay  the  loans  at  that  time?  These  loans  always  become overdue, making themselves new non-performing assets of state-run commercial banks. This is a vicious circle of loans and non-performing assets.

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3 RESEARCH OF DISPOSAL METHODS OF NPA OF AMC Y ....... 20

3.1 Brief Introduction to AMC Y ............. 20

3.1.1 Background of AMC Y ............. 20

3.1.2 Main Categories of Business in AMC Y .............. 20

3.1.3 The Situation of Non-performing assets of AMC Y .......... 21

4 PROMOTION STRATEGIES FOR THE DISPOSAL OF NPA OF AMC Y ......... 31

4.1 Promotion Strategies for Auction Disposal Method ............ 31

4.1.1 Use Internet and Induction Conference to Publicize ................. 31

4.1.2 Adopt Bidding Method to Confirm Auction Company ......... 31

5 FUTURE DEVELOPMENT OF AMC Y .................. 49

5.1 Fulfill Political Tasks and Company Transformation ................... 49

5.2 Explore New Business Pattern of Investment Banks ................ 49

5 FUTURE DEVELOPMENT OF AMC Y

5.1 Fulfill Political Tasks and Company Transformation

AMC Y has a competitive advantage with NPA disposal and management as its core business. Banking industry is a highly competitive market. If AMC wants to enter this market, it must have its own core competitiveness. AMC has many core advantages. 1. The  national  network  advantage  of  AMC  helps  it  to  capture  local  market  and  form new marketing  net.  2.  AMC  has  an  advantage  of  rich  experience  of  NPA.  Through years of practice of AMC , it gradually gets mature.3. AMC has great advantage of clients resources. Over the recent years, AMC has fostered many clients and potential clients,  which  allows  AMC  to  have  a  ability  to  disposal  large-scale  NPA.  This advantage  is what  other  big  financial  institutions  like  banks  and  security  companies don’t  own  now  and  what  some  private companies  and  joint-stock  enterprises  are incapable to get in the future. Besides, AMC already has relevant business experience of investment banks and introduced professional talents.

In  consideration  of  current  financial  system  in  China,  AMC  and  other  financial institutions  will  be  mutually beneficial  in  the  future.  AMC  can  apply  marketized methods to purchase new assets through independent choice of assets purchase,assets valuation  and  negotiation  on  the  basis  market  principles  instead  of  on  the  basis  of governmental  policies.  For  example  AMC  can  purchase  non-performing  loans  in state-owned  commercial  banks on a  single  purpose  of  making  profits.  In  fact,  this kind  of  purchase  helps  state-owned  banks  to  reduce  financial risks.  In  market economy,  AMC  and  commercial  banks  will  have  a  mutually-beneficial  and complementary relationship after AMC fulfills its political tasks.

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6 CONCLUSION

6.1 Main Task of This Thesis

1. Explanation of basic theories of NPA disposal

2. Introduction to the current situation and methods of NPA of AMC Y  

3. Analysis of disposal methods of NPA and their defects

4. Aiming at the defects of disposal methods, we propose some operable promotion strategies to improve the disposal efficiency.

Aiming  at  the  future  development  of  AMC  Y,  we  put  forward  a  new  idea  of exploring  new  business  pattern of  investment  bank  with  a  core  of  assets  disposal. AMC Y can use previous experience of assets management and explore a wide market of financial service,developing into a collectivized company and real investment bank and laying a firm foundation for long-term development.

reference(omitted)