CCB, ICBC Said Planning to Sell Bad Loan Asset-Backed Securities

  • China Construction Bank hasn’t set size, price, person says
  • Industrial & Commercial Bank’s plans in early stages: people

China Construction Bank Corp. is planning to sell asset-backed securities tied to non-performing loans, said a person familiar with the matter. Industrial & Commercial Bank of China Ltd. is also planning an offering, other people said.

CCB is preparing to make an offering of ABS tied to soured loans, and the size and price haven’t yet been decided, said the person, who asked not to be identified because the details are private. ICBC’s plan is still in the early stages, the other people said. So far no external agents have been involved in ICBC’s plan, according to one of the people.

The planned offerings come after Bank of China Ltd. and China Merchants Bank Co. completed sales of bad loan ABS this month, reviving a type of financing that gives the nation’s lenders another way to remove a growing pile of soured lending from their books. President Xi Jinping faces pressure to help banks cut the biggest pile of bad loans since 2005 as sliding corporate profits and rising defaults worsen credit strains.

An official in CCB’s media department declined to comment. An official in ICBC’s media department also wouldn’t comment.

Regulators will allow domestic banks to issue up to 50 billion yuan ($7.6 billion) of such asset-backed securities, people familiar with the matter said in February. The issuance earlier this month was the first of its kind since the global financial crisis prompted Chinese authorities to put a halt to securitization. While that general ban ended in 2012 with products tied to performing assets such as car financing, securities linked to bad debt are only now reviving.

— With assistance by Xize Kang, and Heng Xie

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