SATURDAY, APRIL 06, 2002
UBS to help China Development Bank dispose of assets
AFP
BEIJING: UBS Warburg, a subsidiary of Swiss bank UBS AG, will help China Development Bank dispose of 40 billion yuan ($4.8 billion) worth of state assets, state media said on Saturday.
It is the largest ever batch of government assets to be managed in cooperation between a Chinese state-run bank and a foreign investment bank, the China Daily reported.
The China Development Bank took control of the assets, many of them in China's largest corporations such as oil giant Sinopec, in return for writing off debt owed by the companies.
This formula is known as "debt-for-equity swaps" and adopted by all of China's largest state banks in an attempt to deal with the country's enormous bad-loan problem.
The swaps have been met with some suspicion among observers because they doubt the quality of the assets the banks obtain.
But in the case of China Development Bank, officials claimed the quality of the assets in the state companies was high.
"Only 30 per cent of the equity is transformed from non-performing loans and the other 70 per cent is made up of secure and profit-making assets," an unnamed bank source told the China Daily.
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