The disputes in the world, after all, have not escaped the fatalism of "if you are together for a long time, you must be divided for a long time, and you must be together for a long time". On January 28, according to Xinhua Finance and Economics, the three major asset management companies (AMCs): China Cinda, Orient Asset Management and Great Wall Asset Management will be transferred to CIC. 
In addition, China Huarong was previously transferred to CITIC Group and has been renamed China CITIC Financial Assets. At this point, China's four largest asset management companies have been merged again after more than 20 years of independence. Our asset management company was established in 1999 with the approval of ***. At that time, due to the impact of the Asian financial crisis, the non-performing assets of state-owned banks and state-owned enterprises soared, and in order to resolve financial risks, an asset management company was established. Take these four major asset management companies as an example, at the beginning of their establishment, they each undertook different objects: Orient Asset Management was established in October 1999 to receive the non-performing assets of Bank of China, China Cinda was established in April 1999 to receive the non-performing assets of China Construction Bank and China Development Bank, China Huarong was established in November 1999 to receive the non-performing assets of the Industrial and Commercial Bank of China, and Great Wall Assets was also established in November 1999 to receive the non-performing assets of the Agricultural Bank of China. Careful students should be able to find that these four major asset management companies correspond to the four major banks. To put it bluntly, it is to strip non-performing assets from state-owned banks, so that state-owned banks can travel lightly. In fact, it is true that at the 2023 China Top 500 Enterprises Summit Forum, three of the four major banks ranked in the top 10 of the top 500 Chinese enterprises, and the remaining Chinese banks also ranked 14th. 
So how do you understand the business of an asset manager? For example, a business owes 1 million to the bank and now has no money to pay it back. For banks, this is bad debts, so the bank will discount the bad debts of 1 million, such as three or five discounts, and then package them to the asset management company. In this way, the bad debts of the bank are stripped out. The debt relationship between the enterprise and the bank becomes the debt relationship between the enterprise and the asset management company. Attentive students may say, since you can give a discount package to an asset management company, why can't you get it back at a discount yourself? The personal understanding is that there is a question of responsibility involved, who will sign it? Who is responsible? The compliance of banks is very strict, and no one wants to be the culprit. From a market perspective, banks have disposed of non-performing assets in a legal and compliant manner, while asset management companies have also purchased high-quality assets from banks in a legal and compliant manner, and debtors have also enjoyed a certain degree of relief and exemption. As a result, banks come out of the quagmire, debtors are less stressed to repay, and asset managers are making money. So you see, maybe what you think is bad debt is bad in itself, how can you still make money? In fact, the business logic is what I said above. Of course, the above examples are only one aspect, for the convenience of everyone's understanding. In fact, there are many forms of disposal of non-performing assets, such as secondary assets, enterprise restructuring, debt-to-equity swaps, and so on. According to the provisions of the Financial System for Financial and Insurance Enterprises promulgated by the Ministry of Finance in 1993, loans are divided into four types: normal, overdue, sluggish and doubtful. An overdue loan is a loan that is overdue and is overdue for more than one day. Sluggish refers to loans that are overdue for two years or less than two years but the operation is stopped and the project is discontinued. Doubtful debts refer to loans that are determined to be irrecoverable in accordance with the relevant regulations of the Ministry of Finance and need to be written off against the provisions for doubtful debts. Non-performing assets are a special industry. Usually because of the economic downturn, the non-performing ratio of banks has risen, so the disposal of non-performing assets industry will be hot. From the perspective of time, from 1999 to 2004, it belonged to the policy business stage, and the four major non-performing asset management companies were established to deal with and digest the non-performing loans from the four major state-owned banks, and in 2004, they began to transform into commercialization. Non-performing asset management companies have expanded from the four major banks to joint-stock commercial banks and city commercial banks. Since 2010, it has been in the stage of full commercialization. Began to get involved in non-financial enterprises, and the business has also expanded to the fields of **, public offering**, financial leasing and so on. 
In terms of classification, in addition to the four major asset management companies, there are also local asset management companies (local AMCs), provincial asset management companies and prefecture-level asset management companies, which can only engage in the disposal of non-performing assets in their own regions. In addition, there are also private asset management companies, the more well-known ones are Dingyi, Jiuying, Jiuxin, Dongfang Chengan, Oaktree Capital, etc. The focus here is on local asset management companies. It is said that all walks of life are in dire straits now, which is true. But ah, the strong never complain about the environment, and local asset management companies are like that. Banks' corporate NPLs are large in scale and generally have collateral, so they are mainly acquired and handled by the four major asset management companies. The 21st Century report disclosed that the non-performing assets of the public in the primary market are now small, and the first has been rising. According to the data disclosed by Yindeng.com, in the third quarter of last year, the average discount rate of single-family business was 77%, an increase of 24% from the previous quarter2%。In order to snatch the non-performing assets of the public, some places will give the non-performing assets in their respective regions, such as billions of non-performing assets, to the first-class platform to which they belong, and then carry out the next operation, such as acquisition, discount, or packaging and then **. In fact, it is understandable that fertilizer and water do not flow into the fields of outsiders. At present, another bright spot of local asset management companies is that they are eyeing non-performing assets of personal loans. In January 2021, the General Office of the China Banking and Insurance Regulatory Commission (CBIRC) issued the Notice on Carrying out the Pilot Work on the Transfer of Non-Performing Loans, which allows batches of individual non-performing loans to be transferred on a pilot basis. Judging from the data released by Yindeng.com, the transfer of non-performing loans in 2021 will start from zero, and the scale in the first quarter will only be 0500 million yuan sold. In the first three quarters of 2023, the number of non-performing personal loans listed will exceed 40 billion, of which the cumulative listing scale of consumer loans will reach 20.6 billion yuan, accounting for 5043%。
Today, local asset management companies have become the main force in the disposal of batch personal non-performing loans. Yindeng.com data also shows that in the second quarter of 2023, local asset management companies accounted for 98 of the transferees of batch individual business9%。However, compared with corporate NPL, NPL has a higher risk, higher cost, and lower profit. I saw a reporter report that although local asset management companies took a lot, they were not so happy. Finally, back to the topic, the consolidation of the Big Four Asset Management Companies (AMCs) actually reveals a clear message: strengthening financial regulation. At the time of their establishment, their major shareholders were the Ministry of Finance. Now three have been merged into CIC, and one has been merged into CITIC Group, and CIC and CITIC are both controlled by ***. I have explained to you the five-year financial conference before, and the meeting first mentioned "financial power", which also mentioned: to be excellent and strong state-owned financial institutions. So from this point of view, it is actually in line with the policy trend. In addition, it is also to prevent financial risks, for example, Huarong has expanded rapidly in the past few years, and recorded a net profit of 22 billion yuan in 2017. But in 2020 and 2022, it fell into losses. Why? There is a very important reason, that is, the proportion of non-performing real estate loans is too high. By the end of 2020, the parent companies of the four major non-performing asset management companies had purchased the balance of non-performing loans of real estate enterprises with debtors only in restructuring business, which was close to 450 billion yuan. According to a report by China Securities Construction Investment at the end of 2021, the restructuring non-performing loans of the parent companies of Cinda, Huarong, Dongfang and Great Wall are real estate enterprises are about 886 respectively7.5 billion yuan, 19237.2 billion yuan, 994300 million and 6540.2 billion yuan, accounting for about 50%. Now that they have merged with CITIC and CIC, it is easier to achieve reform and risk mitigation with the help of a larger platform. In the past, when you looked at this market, it was spun out, and it was vertical and subdivided. And now, 30 years in Hedong and 30 years in Hexi, sure enough, they still haven't escaped the fate of "meeting for a long time". If you look at it this way, there will be more and more re-mergers of financial institutions in the future. After all, in this way, the stability has become stronger, and the systemic risk can be reduced, I am the hall master, and I will talk about it in this issue, and we will see you in the next issue
The three major AMCs will be merged into CIC