Ministry of Finance, Evaluation of the Disposal of Non-performing Assets by Financial Asset Management Companies Measures (Trial Implementation)

Issued: 12 November 2001
Effective: 1 January 2002
Applicability: The Procedures are applicable specifically to the four named wholly State-owned financial asset management companies (Huarong, Great Wall, Dongfang and Xinda). "Non-performing assets" refer to the assets acquired by the financial asset management companies (Items 1 and 2).

Main contents: According to the Procedures, net cash recovery from disposal of non-performing assets is the main item of evaluation (Item 3). Net cash recovery excludes cash flow from debt-to-equity swaps under the State plan and issue of debt instruments and taking out of commercial loans outside State direction. In the annual financial plans submitted to the Ministry of Finance, the financial asset management companies shall formulate their annual asset disposal plans and cash recovery plans according to the circumstances of the non-performing assets, and the Ministry of Finance shall determine the basic expenditures of the financial asset management companies on the basis of their cash recovery plans (Item 4). Each financial asset management company will be rewarded with a bonus equivalent to 1% to 1.2% of the net cash recovery it has achieved (Item 5). The bonus shall be distributed to individuals who have outstanding performance in cash recovery (Item 8).
Related legislation: Financial System of Financial Asset Management Companies