China Opens the Door to Securitization
June 02, 2005 | BY
clpstaff &clp articlesChina's capital market is certain to benefit from the China Banking Regulatory Commission and the People's Bank of China's joint release of new Procedures on the securitization of credit assets. Limitations remain, however, concerning the types of institutions that can originate securitizations and the types of assets that can be securitized.
By David Liu and Nelson Zhou, Jun He Law Offices, Shanghai
Following years of speculation and debate among regulators, the People's Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC) finally enacted the Administration of Pilot Projects for Securitization of Credit Assets Procedures (the Procedures - see p.39 for a full translation) on April 20 2005. The Procedures reflect the first concerted regulatory effort to address securitization issues in China.
Securitization transactions are not completely new in China. Some quasi-securitization transactions have already taken place, with the promulgation of the PRC Trust Law (中华人民共和国信托法)in 2001. In 2003 and 2004, Huarong Asset Management Company and the Industrial and Commercial Bank of China utilized trust-based structures in quasi-securitization transactions to dispose of non-performing loans (NPLs). Earlier this year, two further domestic securitizations of NPLs were approved.
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