Office of the China Banking Regulatory Commission, Circular on Regulating the Credit Asset Benefit Right Transfer Business of Banking Financial Institutions

Investors in non-performing asset benefit rights are restricted to qualified institutional investors. Bank wealth management products, trust plans and asset management plans in which individual investors participate in the subscription therefor may not invest in non-performing asset benefit rights. The source of funds of institutional investors shall be subject to the transparency principle, and the funds of individual investors may not be attracted directly or in a disguised form through means such as nesting (Article 2(5)).

Where a qualified investor-subscribed bank wealth management product that satisfies the foregoing provisions and that invests in credit asset benefit rights completes transfer and centralized registration, the relevant assets shall not be counted in the non-standardized debt asset statistics and shall be listed separately in the China Banking Wealth Management Registration System (Article 2(8)).

Issued: April 28 2016

Main contents: The transferring bank shall provision in the full amount for the original credit assets in accordance with the Measures for the Administration of the Capital of Commercial Banks (Trial Implementation) once credit asset benefit rights have been transferred (Article 2(1)).

If transfer of non-performing asset benefit rights is to be engaged in, and there is ongoing involvement, when calculating metrics such as the non-performing loan balance, the non-performing loan percentage and the provision coverage rate, the transferring bank shall count the ongoing involvement portion as part of the statistical indicators for non-performing loans (Article 2(2)).

The transferring bank may not directly or indirectly, through its wealth management proceeds, invest in its own credit asset benefit rights and may not undertake buyback obligations, whether overt or covert, in any manner (Article 2(4)).

Investors in non-performing asset benefit rights are restricted to qualified institutional investors. Bank wealth management products, trust plans and asset management plans in which individual investors participate in the subscription therefor may not invest in non-performing asset benefit rights. The source of funds of institutional investors shall be subject to the transparency principle, and the funds of individual investors may not be attracted directly or in a disguised form through means such as nesting (Article 2(5)).

Where a qualified investor-subscribed bank wealth management product that satisfies the foregoing provisions and that invests in credit asset benefit rights completes transfer and centralized registration, the relevant assets shall not be counted in the non-standardized debt asset statistics and shall be listed separately in the China Banking Wealth Management Registration System (Article 2(8)).