China Said to Allow Five Regions to Create Bad-Loan Firms

China’s banking regulator is allowing governments in five places including Shanghai to set up asset-management companies to buy bad loans from financial institutions, three people with knowledge of the matter said.

The trial program also covers the provinces of Guangdong, Zhejiang, Jiangsu and Anhui, said the people, who declined to be identified as they aren’t authorized to speak to the media. The firms can buy local soured loans from banks, trust and finance companies and leasing firms, the people said.