China encourages bad loan companies to aid struggling developers -China Sec Journal

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SHANGHAI, Jan 27 (Reuters) - China's financial regulators have met with the country's major bad loan companies to study how such asset management companies (AMCs) can participate in developers' asset disposals, the China Securities Journal reported on Thursday.

China is encouraging state companies to acquire projects from cash-strapped developers to help ease severe liquidity stress on the sector that could threaten financial and social stability.

Bad loans companies have rich experience in disposing of soured assets, as well as project mergers and acquisitions, and their participation can help dissolve risks in China's struggling property sector, the state-owned newspaper said.

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The article did not name the regulators or the companies that were summoned by them.

China has four big AMCs - Cinda, Huarong, China Orient and Great Wall - that were originally set up to dispose of non-performing loans from major state banks.

On Wednesday, China Evergrande Group (3333.HK) said it aims to have a preliminary restructuring proposal in place within six months as the debt-laden developer scrambles to reassure creditors spooked by defaults since its finances began to unravel last year. read more

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Reporting by Samuel Shen and Brenda Goh; Editing by Lincoln Feast.

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