Speed up slimming and return to AMC’s main business

Under the influence of the epidemic and the economic environment, the pressure on the asset quality of the banking industry has increased. Recently, the China Banking and Insurance Regulatory Commission (CIRC) asked banks to handle more non-performing loans this year than last year, which also provides a broad space for non-performing asset management companies. After a few years of rapid expansion, as the “scavengers” of the financial system, the four major financial asset management companies (AMC) have “downsized” and accelerated their return to the main business. At the same time, they have increased the purchase of non-performing assets to continuously improve the development quality of the main business. Faced with the emergence of business opportunities, industry analysts believe that AMC layout ushers in the best opportunity period in the process of economic recovery from the trough. In order to meet the test, companies need to systematically enhance the level of business screening, strengthen project management ability, and improve the efficiency of capital use.

No reduction in the disposal of non performing loans

On April 16, at the press conference on the operation of the banking and insurance industry in the first quarter of 2021, Liu Zhiqing, deputy director of the Information Technology Department of the CIRC, introduced that at the end of the first quarter of 2021, the balance of non-performing loans was 3.6 trillion yuan, an increase of 118.3 billion yuan over the beginning of the year, and the non-performing loan ratio was 1.89%, a decrease of 0.02 percentage point over the beginning of the year. This year, we should maintain the intensity of non-performing loan disposal, and promote the overall disposal of non-performing loans of banks throughout the year to be more than that of last year.

When it comes to the target for the disposal of non-performing loans this year, Xiao Yuanqi, vice chairman of the CIRC, said at the meeting that last year, 3.02 trillion yuan of non-performing assets were disposed of, and this year’s target is certainly not lower than that of previous years. Now, in addition to urging banks to check and deal with all the problems, the key to non-performing loans is to help them simplify the channels and remove the obstacles.

It is worth noting that under the pressure of asset quality in banking industry, asset management companies mainly engaged in non-performing asset management have seized the market opportunity in recent years and increased the investment in main business. In the past year, the scale of non-performing assets acquired by the four AMCs has remained at a high level.

According to public data, in 2020, China Huarong Asset Management Co., Ltd. (hereinafter referred to as “China Huarong”) increased the acquisition and disposal of non-performing assets, with the annual acquisition of asset packages exceeding 180 billion yuan, accounting for 40% of the market; in 2020, China Great Wall Asset Management Co., Ltd. (hereinafter referred to as “Great Wall assets”) accumulated acquisition of non-performing assets exceeding 140 billion yuan, accounting for 40% of the market The main business of assets accounts for more than 70% of the stock business; in 2020, China Eastern Asset Management Co., Ltd. (hereinafter referred to as “China Eastern”) invested 95.2 billion yuan in non-performing assets, and the scale of non-performing main business at the end of the year was 282.4 billion yuan, an increase of 11% compared with the beginning of the year; by the end of 2020, the total operating capital of non-performing assets of China Cinda Asset Management Co., Ltd. (hereinafter referred to as “China Cinda”) The output reached 1002.081 billion yuan, an increase of 56.9 billion yuan compared with the end of last year, and the proportion in the total assets of the group further increased to 66%.

AMC accelerates “slimming”

Under the regulatory requirements that all financial asset management companies focus on the main business, AMC has been speeding up the pace of returning to the main business, speeding up the “downsizing” one after another, and integrating diversified businesses outside the main business of non-performing assets.

Recently, AMC “retreats” insurance industry adds another example. According to the official website of Shanghai United Property Exchange, 70% of the shares of Changsheng Life Insurance Co., Ltd. (hereinafter referred to as “Changsheng life”) were listed and transferred by Great Wall assets and its wholly-owned subsidiary Great Wall Guofu Real Estate Co., Ltd. Information disclosure starts and ends from April 14 to May 12, 2021. The other 30% equity of Changsheng life is owned by Japan life insurance mutual.

Previously, Cinda also announced in July 2020 that the transfer of 50.995% of its shares in happy life insurance has been approved by the CIRC and transferred to Chengtai insurance and Dongguan trading and investment group respectively.

The transfer of insurance assets is a microcosm of AMC’s return to the main business in recent years. In August 2020, the China Banking and Insurance Regulatory Commission (CIRC) issued the notice on properly coping with the impact of the epidemic and better playing the role of financial asset management companies in defusing and disposing risks, which requires all financial asset management companies to focus on their main responsibilities and give full play to their role in defusing and disposing risks of Finance and real enterprises.

“Since 2010, the four AMC businesses have gradually diversified, and even put the cart before the horse, making the disposal of non-performing assets almost a sideline. However, with the emerging risks of multi line layout, the four AMCs have accelerated the pace of returning to the main business, transferring their insurance companies, investment companies and loan companies that are not related to the main business of non-performing assets. ” So said Yu Baicheng, President of the zero one research institute.

Liao Hekai, an analyst of Jinle function, further pointed out that with the rise of non-performing loans in recent years and the establishment of local AMCs supported by policies, the competition among the four AMCs in the main business has intensified, and the pressure has become more and more obvious. In the process of more than ten years of comprehensive commercialization, many non main businesses have brought Limited real income to the group, especially a large proportion of which have poor business continuity and large losses Clearing non main financial assets is the only way for the four AMCs to survive and develop in the new era, and it will continue.

On April 18, a reporter from Beijing business daily tried to interview the four AMCs on how to plan their main responsibilities in the next step, but no reply was received as of press release.

More market space

At the same time of actively “downsizing”, returning to the business origin and continuously improving the development quality of the main business have been repeatedly mentioned in the recent deployment of the next work of the four AMCs. With the pressure of economic growth and the impact of the epidemic, the scale of non-performing assets of domestic financial institutions has been rising in recent two years. In this context, AMC is facing new development opportunities.

At the beginning of 2021, the general office of the CIRC issued the notice on carrying out the pilot work of non-performing loan transfer, allowing batch transfer of individual non-performing loans and transfer of non-performing assets of corporate loans in the form of a single household, allowing more financial institutions to participate in the transfer of non-performing assets, and the pilot business officially entered the practical stage.

Subsequently, AMCs actively responded to the pilot work of non-performing loan transfer. In March this year, in the first batch of six pilot business of non-performing loan transfer launched by yindeng center, Great Wall Asset successfully won the public transfer of a single non-performing loan from ICBC; China Eastern finally won the bid of Ping An Bank’s non-performing asset package of personal operating credit loan. Recently, China Huarong Jiangsu Branch successfully won the non-performing loan of a real estate company in Jiangsu transferred by a bank through the open bidding of yindeng center, with the total principal and interest of 160 million yuan.

Yu Baicheng pointed out that the pilot transfer of non-performing loans is conducive to the efficient and batch processing of non-performing assets, and also gives AMC more market space. In the process of rapid development of digital economy, the types of non-performing assets are expanding and combining with the Internet. AMC should also enhance the ability of digitization, reduce costs and increase efficiency through digital technology, and enhance the ability of identification, evaluation and disposal of digital non-performing assets.

“In the process of economic recovery, the emergence of business opportunities and risk reduction is the best opportunity period for AMC layout. The return of the four AMCs to the main business and the hierarchical competition with local AMCs will accelerate the development process of China’s non-performing assets industry. At the same time, the change of industry competition pattern will increase the difficulty of industry exhibition and reduce the profit level of the industry, which requires companies to systematically enhance the business screening level, strengthen the project management ability and improve the efficiency of capital use. ” Liao Hekai said.

Beijing Business Daily reporter Meng fanxia Ma Di

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