(Dec 9): The Chinese government plans to transfer ownership in one of the nation’s biggest bad-debt managers to a unit of its sovereign wealth fund in coming weeks as part of a regulatory overhaul, according to people familiar with the matter.

The Ministry of Finance is currently going through the process to move its holdings in China Cinda Asset Management Co to Central Huijin Investment Ltd, the people said, asking not to be identified as the matter is private. The plan is in its final stage but may still change or get delayed, they said. 

The progress reflects Beijing’s effort to disentangle its regulatory and ownership functions, streamlining governance and promoting more disciplined operations in its state-owned entities. Bloomberg News had reported the plan in May last year. 

The Ministry of Finance holds a 58% stake in Cinda, according to the company’s 2023 annual report. Central Huijin, a unit of China Investment Corporation (CIC) which has US$1.33 trillion (RM5.87 trillion) in total assets, has long been the government’s proxy for holding stakes in state banks, insurers and brokerages. 

The Ministry of Finance and China Cinda didn’t immediately respond to requests for comments. A media representative for CIC declined to comment.

As part of Beijing’s financial regulatory regime overhaul, Citic Group overtook the finance ministry as the largest shareholder in another bad asset manager, China Huarong Asset Management Co in a government-orchestrated bailout in 2021.

China is also considering a shareholder revamp of China Great Wall Asset Management Co and China Orient Asset Management Co, Bloomberg News reported earlier. 

The four asset management companies were established in late 1990s to buy bad loans from banks after decades of government-directed lending to state companies left China’s biggest lenders on the brink of insolvency. The firms later expanded beyond their original mandate, creating subsidiaries to engage in other financial businesses, including shadow lending.

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