What does it mean for banks to sell non-performing loans?

After the bank packages the non-performing assets, they transfer them to asset management companies in batches. Depending on the size of the asset package, the asset management company can adopt a one-time buyout or installment buyout method. The installment buyout method can be from Reduce the financial pressure of asset management companies to a certain extent.

Cooperative disposal. At the stage of policy-based receipt of non-performing assets from state-owned banks, asset management companies have a preliminary understanding of the debtors, but cannot go deep into the industry. At this stage, they can join hands with high-quality companies in the same industry to reorganize non-performing assets and ultimately achieve maximum benefit sharing. .

Extended information:

Notes:

Banks participating in creditor's rights transactions may, depending on the creditor's rights, list them for sale on a professional market established with the approval of the People's Bank of China The price for selling a creditor's right can be determined based on the risk level of the creditor's right and the accompanying cash flow. The seller's bank and the buyer can determine the final transfer price through open and transparent methods such as bidding and bidding to prevent the occurrence of moral hazard.

Through market-oriented operation, the seller can quickly recover funds and improve its liquidity, and the buyer can buy out the seller's claims below the book value of the claims, achieving a win-win situation for both the seller and the buyer. Measures for the Management of Batch Transfer of Non-Performing Assets

Legal Analysis: The "Notice on Carrying out the Pilot Work on the Transfer of Non-Performing Loans" has achieved four major breakthroughs in the transfer of non-performing assets and is conducive to the efficient and batch processing of non-performing assets. First, expand the transfer categories of non-performing assets and allow batch transfer of personal non-performing loans. Second, relax the threshold requirements for the batch transfer of non-performing assets and allow the transfer of non-performing corporate loan assets in the form of a single household. Third, expand the objects of non-performing asset transfer and allow more financial institutions to participate in the transfer of non-performing assets. Fourth, the geographical scope of the transfer of non-performing assets has been relaxed, and the transfer of personal non-performing loans is not subject to regional restrictions.

Legal basis: "Measures for the Administration of Bulk Transfers of Non-Performing Assets of Financial Enterprises"

Article 7 The scope of batch transfer of non-performing assets by financial enterprises includes the following non-performing credit assets formed by financial enterprises in their operations. and non-credit assets:

(1) Loans identified as substandard, doubtful, and loss-type according to prescribed procedures and standards;

(2) Assets on record that have been written off ;

(3) Debt-repossessed assets;

(4) Other non-performing assets.

Article 8 The following non-performing assets shall not be transferred in batches:

(1) The debtor or guarantor is an asset of a state agency;

(2) Approved by the State Council Assets included in the national enterprise policy closure and bankruptcy plan;

(3) National defense and military industry and other assets involving national security and sensitive information;

(4) Personal loans (including loans to individuals) Various types of loans issued with individuals as the main borrowers, such as house purchase loans, car purchase loans, education student loans, credit card overdrafts, and other consumer loans);

(5) There are restrictions in the loan contract or guarantee contract Assets subject to transfer terms;

(6) Other assets restricted from transfer by national laws and regulations. Why personal loans are not allowed to be transferred in batches

Personal loans are characterized by relatively small amounts and large numbers. If they are disposed of through transfer to achieve the purpose of removing non-performing assets from the balance sheet, they can only be transferred in batches. At present, it is stipulated that personal loans, including house purchase loans, car purchase loans, education student loans, credit card overdrafts, other consumer loans and other types of loans issued to individuals with individuals as the main borrowers, are not allowed to be transferred in bulk.

At present, the most important component of personal non-performing loans are personal operating loans issued by commercial banks to small and micro business owners and individual industrial and commercial households in recent years. For this type of loans, innovative linkages are generally used when granting credit. Guarantee and mutual guarantee models mostly have no collateral or pledges. Affected by the downturn of the economic cycle, non-performing problems have continued to break out. Moreover, it is very unlikely to use conventional collection methods to recover the loan in a short period of time. If the transfer cannot be carried out, it will be The credit asset quality and profit indicators of commercial banks have a great impact. At present, some commercial banks issue small business loans to replace "personal operating loans" through equal replacement, changing the nature of the loan to meet the conditions for batch transfer. However, doing so requires the cooperation of the debtor and poses compliance risks. Extremely large and may face severe penalties from regulatory agencies.

Personal non-performing loans can be transferred. What is the scope covered?

Personal non-performing loans can be transferred! Including consumer loans, credit card overdrafts, business loans, etc...

In January 2021, the China Banking and Insurance Regulatory Commission issued the "Notice on Carrying out the Pilot Work on the Transfer of Non-performing Loans", officially launching the sale and purchase of single-family corporate non-performing loans. Pilot batch transfer of personal non-performing loans, and personal consumption loans, credit card overdrafts, and personal business loans classified as non-performing will be included in the scope of transfer.

1. ICBC and Ping An Bank took the lead in trial transfers

ICBC publicly transferred 5 businesses, with the principal and interest amount of non-performing loans*** totaling 639 million yuan, including 2 single-account corporate non-performing loans Loan transfer business, the underlying assets are from Zhejiang and Sichuan respectively; 3 individual non-performing loan batch transfer business, the underlying assets include personal consumption credit loans and credit card overdraft business.

Ping An Bank publicly transferred a batch of individual non-performing loans, with a principal and interest amount of 17.73 million yuan, and the underlying assets were personal business credit loans.

2. The transfer attracted market attention and multiple rounds of bidding were conducted

After the first batch of pilot businesses released the transfer announcement, they received widespread attention from the market. After the listing, the number of transferees who applied to participate in the bidding reached 16, covering all national financial asset management companies or their provincial branches, as well as 5 local asset management companies. At most, there are 9 transferees quoting the same business, and the number of quotation rounds is up to 44.

Guohou Asset successfully bid for the first batch transfer asset package of personal non-performing loans from the Industrial and Commercial Bank of China, consisting of 41 households with an outstanding principal of 14.894 million yuan and a total of 26.3762 million yuan of outstanding principal and interest. This is the first batch transfer of personal non-performing loans since the implementation of the pilot work, and it is also the largest transaction in this transfer.

“This non-performing loan transfer is not much different from the previous traditional non-performing asset package transfer process, bidding method, and transaction form.” Xu Xiaodan, deputy general manager of Zhejiang Jinyue Asset Management Co., Ltd., mentioned that due to personal The single amount of non-performing loan asset packages is small and the capital occupied is relatively small, which may be more attractive to private or mixed local asset management companies.

The significance of the transfer of non-performing assets

1. From the perspective of a bank, this move will help broaden the channels for the disposal of personal non-performing assets;

2. From the perspective of an asset company In other words, when banks' shipments of non-performing assets are on a downward trend, the channels for asset companies to acquire non-performing assets can also be broadened.

However, it is still difficult to judge the disposal effect and profitability after the pilot.

Liang Si, a researcher at the Bank of China Research Institute, believes that it is of great significance to "break the ice" in the transfer of personal non-performing assets.

On the one hand, it means that the disposal of non-performing assets through market-oriented means is accelerating, which will further enhance the efficiency of disposal of non-performing assets, improve the asset quality of commercial banks, and maintain the stability of the financial system.

On the other hand, the diversification of non-performing asset disposal channels will help tap more market forces to participate in the management and disposal of non-performing assets, which will better complement the normal operation of the market and facilitate the improvement of financial services. level of specialization.

Liang Si said that after the first business is implemented, it will bring some experience for reference on the pricing of individual non-performing assets and the revitalization after transfer, which will provide guidance for the establishment of subsequent pricing curves and liquidity management. Wait to lay the foundation.