The Chinese government has acknowledged that the economy has slowed down in the recent past according to an executive from Alibaba Group Holding Ltd (NYSE:BABA), which is the largest e-commerce entity. As such, soured loans online must be auctioned in an effort to settle the bad debts.
The auctioning will be carried out by Huarong Asset Management Co Ltd, which is headed to becoming the second Chinese bad loan firm having been set up a decade ago alongside three others. However, it is the largest in terms of asset ownership.
Currently, China Cinda Asset Management Co is the second largest and was at the forefront of launching online auctions earlier this year. 24 million yuan of bad debts were successfully sold on Alibaba’s online marketplace Taobao.
Huarong has already signed an auction treaty to confirm and justify its intentions. The platform has also approached Orient Asset Management Co and Great Wall Asset Management Co. If three parties’ talks yield any fruits, the two asset managers are expected to play a great role in enhancing access to the already booming market for asset management.
According to the Chinese Government, the banking sector is the most hit by the bad debts. This has led to a slower pace of the economy’s growth within the quarter. Non-performing loans are on the increase from the data collected from the China Banking Regulatory Commission.
Auction’s manager on Taobao, Lu Weixing, says that the debt for Commercial Banks has greatly piled. Asset management companies have a similar scenario and a whole $7 billion in soured loan has been offered by Cinda to investors in its public sale.
Various institutions dealing with different markets use Taobao to do business including courts and local authorities. 103 apartments in Milan alongside a 16-century Italian are among the items that have been put up for auctioning on Taobao. The two are as a result of the joint effort between Alibaba and the Italian government.
There is a bigger target of overseas auctions later in the year that is expected to yield more.