Reply #7: Top China bank sheds $30 bln bad debt pre-IPO [View All]

[UpInArms]

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8650385

SHANGHAI, May 31 (Reuters) - Industrial and Commercial Bank of China will offload $30 billion of bad assets to a state debt clearer, officials said on Tuesday, as the nation's top lender moved to shore up its fiscal health before a multi-billion-dollar share sale.

Huarong Asset Management Company, one of four government debt-clearing agencies, will take on 246 billion yuan ($29.7 billion) in non-performing loans (NPLs) from ICBC , a Huarong official told Reuters, confirming a state media report.

The move follows a smaller-than-expected $15 billion injection for the bank, as Beijing pushes lenders to float shares; attacks industry corruption; and otherwise scrambles to shore up a sector laden with more than $200 billion in sour debt before it opens wider to foreigners in 2007.

An ICBC executive told Reuters the deal would be overseen by the finance ministry but would not elaborate.

"Is this a back-door recapitalisation? It seems like it is," said David Marshall at Fitch Ratings.

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