Wenzhou, the eastern Chinese city hit hardest by the collapse of private lending last year, will assign about 100 judges to clear up mounting bad loans at its lenders, the China News Service said.
The judges will work with 50 to 100 financial institutions starting next month to deal with soured assets in the city’s banking system, the state news agency reported yesterday, citing unidentified court officials. Wenzhou’s non-performing loans have soared to 23.86 billion yuan ($3.8 billion), from 8.6 billion yuan in 2011, according to the news agency.
In Wenzhou, an export hub where almost 90 percent of families have taken part in underground lending, more than 100 people have fled, committed suicide or declared bankruptcy from August 2011 through last May, and at least 800 lending brokers went bankrupt, according to Xinhua News Agency.
The local government will also assign judges with experience in commercial cases to 100 troubled entities, the China News Service said in yesterday’s report.
The judges will provide legal assistance to companies that have promising outlooks, while weeding out failing enterprises in industries with high pollution and energy consumption through bankruptcy, the news service said.
Wenzhou last year set up a financial court and simplified bankruptcy proceedings as cases soared amid an economic slowdown in the U.S. and Europe and the collapse of the city’s private lending market.
Two phone calls to the press offices of Wenzhou Intermediate Court and the local government’s financial services departments seeking comment today went unanswered.