Huarong Asset Management Co Ltd is poised to become the second Chinese bad loan firm to auction soured loans online amid a push by the government to settle these debts as the economy slows, an executive at e-commerce giant Alibaba Group Holding Ltd said.
Huarong is China’s biggest bad loans firm by assets and one of four companies the government set up about a decade ago. China Cinda Asset Management Co, the second largest, earlier this year launched online auctions, selling some 24 million yuan of bad debts on Alibaba’s online marketplace Taobao.
Lu Weixing, who manages auctions on Taobao, said Huarong had also signed an auction agreement, and that the platform was also in talks with the other two asset managers – Orient Asset Management Co and Great Wall Asset Management Co.
“The market for asset management is booming,” Lu told Reuters.
China’s economy is set to grow at its slowest pace in a quarter of a century, heightening the government’s concern about bad debts especially in the banking sector, where non-performing loans are rising at their fastest rate since 2004, data from the China Banking Regulatory Commission shows.
Commercial banks and asset management companies are “under huge pressure” to settle the debt pile, Lu said. On Thursday, Cinda offered nearly $7 billion in soured loans to investors in its largest ever public sale.
At least 14 financial institutions, including China Merchants Bank Co, China Minsheng Banking Corp and Tianjin Financial Assets Exchange use Taobao to sell cars, real estate, wineries, factories, corporate shareholding, and land, the website shows.
Courts and local authorities are also using the platform to sell assets: this month, the Shaanxi provincial government sold 171 cars confiscated in a nationwide corruption crackdown for just under 9 million yuan. The sale attracted nearly 7,000 bids.
Earlier this month, Taobao also put up for auction a 16-century Italian castle and 103 apartments in Milan as part of a joint-effort between Alibaba and the Italian government.
“The Chinese always like to buy real estate overseas,” said Lu, adding Taobao was targeting more global auctions this year.