China Development bets on bad-loans

China Development Financial Holding Corp (中華開發金控), the nation's fifth-biggest financial services company by market value, said it may double the capital at its bad-loan unit to NT$10 billion (US$295 million), betting it can profit from accelerated economic growth.

"We are planning to buy more non-performing loans to leverage on the prospects of economic recovery," said Grace Fang (方鳳山), the company's spokeswoman,

"We may also advise the troubled companies on restructuring their businesses or develop real estate projects together," she said.

The additional capital would go to the company's asset manager, China Development Asset Management. The company's board was to vote on the proposal yesterday before submitting a plan to the Ministry of Finance.

China Development Financial, which has about 260 direct and venture capital investments, said last month that its priority is to bolster that business.

Local and overseas asset managers are competing in the bad-loans market as the government moves to clean up non-performing loans built up during a decade-long slump in property prices and a 2001 recession.

The government in August raised its economic growth forecast for the year to 3.06 percent from 2.89 percent.