China's AMC market eyed by Taiwanese holding firms

Two Taiwanese holding companies want to profit from opportunities posed by Chinese asset management companies.

With the inking of the financial memorandum of understanding (MOU) between Taiwan and China, Yuanta Financial Holding Co. and Mega Financial Holding Co. both are eyeing the asset management market or the so-called AMC market in China.

Market observers believe that Yuanta and Mega can tap the AMC market in China since the former has a strong construction firm adept at real estate operations and the latter is a state-owned financial company in Taiwan, coupled with its chairman Wang Jung-chou once having headed Taiwan Asset Management Corporation, and has ample experience in handling bad loans, according to CENS.

A senior executive at Yuanta says that the AMC market in Taiwan is shrinking as non-performing loans (NPLs) are undermining average NPL rate, which is at a low of 1.6 percent among domestic banks.

In contrast, China's banking system has witnessed accumulated bad loans of 1.6 trillion renminbi (RMB) or NT$7.52 trillion ($227.88 billion) since 2002. So far only 30 percent of such loans have been settled and the remaining 70 percent remains "collectible," indicative of big potential for asset management companies.