Shanghai to Create Asset Management Company to Control Bad Debts
Shanghai will be setting up their own asset management company after the same move has done by nearby provinces of Zhejiang and Jiangsu that will they hope will clean up bad debts. The new company will be managed by Shanghai State owned Assets Operation Co.
The country was already created four assets management companies in 1999 that clean up bad debts loan of the four State owned banks. After these companies help resolve the debt problems and several asset management companies have looked into doing new businesses in other areas in the financial sector. China Cinda Asset Management Co. was first of the four debt clearing agencies to go public when they offer their initial public offering that was snatched up by investors sending its stocks up 26 percent during its trading debut.
The frenzy was further boosted on the rumors that the bad debts in the banking system will provide more opportunities in the business amid the slow economic growth. Local government were given the green light to create their own debt clearing offices and the eastern province of Jiangsu to create a asset management firm earlier and its neighbor Zhejiang is preparing to create one as well.