FAIR III – Session V
Developing the Asian MarketsPRC Experience
David Kidd
Allen & Overy
11 November 2003
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
PRC NPLs - the story so far
AMCs (Cinda, Huarong, Great Wall, China Orient) established in 1999
1.4 trillion yuan (US$170 billion) transferred by ICBC, BOC, CCB and ABC
To date 21.5% sold by AMCs “NPLs cloud Big Four banks” - 6.11.03
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
Resolution issues
Legal framework State ownership Real estate Restructuring culture
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
Legal framework
1986 Trial Bankruptcy Law 1991 Civil Procedure Law 2002 Supreme Court interpretation New law in 2004? GITIC landmark (cf GDE) Judiciary
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
State ownership
PRC a socialist centrally planned economy Approval processes are slow Move towards private ownership and
improved corporate governance Role of SOEs in employee welfare
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
Real Estate
All land owned by state (urban) or collectives (rural)
Allocated/Granted/Leased Security over tangibles Enforcement slow Employee rights
ALLEN & ALLEN & OVERYOVERY
FAIR III – Session V
Restructuring experience
GDE/FJE/ITICs/Zhu Kwan Government support after GITIC Inertia, indecision and limited local
experience (but no dominant family interests) Must combine international experience with
local knowledge through strong servicing vehicles
ALLEN & ALLEN & OVERYOVERY