Foreign Investment in NPL Assets: Is China's Legal Environment Up to the Task?

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clpstaff &clp articles

China's state-owned commercial banks are saddled with portfolios of non-performing loans (NPLs). Do China's legal, regulatory and tax regimes offer attractive structures to draw foreign investment into this sector?

By David D. Liu, Sidley Austin Brown & Wood, Shanghai

The PRC government has made tackling the NPL problem a very public and high profile task. State-owned Asset Management Companies (AMCs) were first set up in 1999 to absorb debts from the four state-owned commercial banks. Although foreign interest in NPL assets has garnered considerable media attention, to date actual investment in the NPL sector has not been very extensive.

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