China plans to restructure Huarong’s shareholding structure

China’s finance ministry is reportedly considering a proposal to restructure its shares in bad debt managers into a new holding company, amid continued pressure for ailing Huarong.

The proposal includes the transfer of the ministry’s shares in China Huarong Asset Management and three other bad debt managers to a new holding company, according to a “Bloomberg” report citing anonymous sources.

The holding company is modeled on the same structure that holds government stakes in state banks.

Separation of powers

The creation of the holding company is seen by some officials as “a step towards separating the roles of government as regulator and shareholder, streamlining oversight and instilling a more professional management culture in Huarong and his peers.”

External investors are also being considered to reduce the controlling holdings of the Ministry of Finance.

No conclusions have been drawn and regulators are awaiting advice from “senior Chinese leaders,” the report adds.

At least end of August

The report also noted that Huarong had entered into financing agreements with state-owned banks to ensure debt repayment until the end of August.

Huarong also plans to complete its 2020 financial statements in the same month.

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