Morgan Stanley and Goldman Sachs Group Inc won approval from the Chinese government to buy more than US$1.5 billion of bad loans, ending a yearlong wait, the first such purchases by overseas investors.
China's Ministry of Foreign Trade and Economic Cooperation approved the purchases, said Han Shengqi, an international business manager at Huarong Asset Management Corp, which is selling the loans.
Morgan Stanley and its partners, Lehman Brothers Holdings Inc and Salomon Smith Barney Inc, will own 65 percent of a venture with Huarong that will manage the sale of US$1.3 billion of bad loans and assets, Han said.
Goldman will work with Huarong to sell a further US$241 million of loans, he said.
Government approval may expedite more agreements between overseas investment banks and China's four asset-management companies, which bought 1.4 trillion yuan (US$169 billion) of loans from the nation's big four banks.
It also gives Morgan Stanley and Goldman the green light to sell the assets, which they purchased at a fraction of face value.
"There is now an understanding that the banks can move forward," said Yen Wei, a banking analyst at Moodys Investors Service in Hong Kong. "The speed in resolving these non- performing loans is too slow."
Huarong purchased US$49 billion of bad debt three years ago from Industrial and Commercial Bank of China, the nation's biggest lender.
Industrial Bank, Bank of China, China Construction Bank and Agricultural Bank of China control about 70 percent of lending in the country.
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