No 2006 – 04February
Who Pays China’s Bank Restructuring Bill?
_____________
Guonan Ma
Who Pays China’s Bank Restructuring Bill?
_____________
Guonan Ma
No 2006 – 04February
Who Pays China’s Bank Restructuring Bill?
3
T
ABLE OF CONTENTS
S
UMMARY
..............................................................................................................................4A
BSTRACT
..............................................................................................................................5R
ÉSUMÉ
.................................................................................................................................6R
ÉSUMÉ COURT
.....................................................................................................................7I. I
NTRODUCTION
..............................................................................................................8II. F
OOTING THE BANK RESTRUCTURING BILL
..................................................................9
1. Bank shareholders .................................................................................................102. Bank customers .....................................................................................................103. Taxpayers ..............................................................................................................114. Towards an institutional framework......................................................................13
III. R
ECENT BANK RESTRUCTURING STEPS IN
C
HINA
......................................................14
1. Issuance of RMB 270 billion in special government bonds in 1998.....................152. The first round of NPL transfers totalling RMB 1.4 trillion in 1999.....................153. USD 60 billion in capital injections out of foreign reserves since 2003................164. Loss recognition by existing bank shareholders....................................................165. Additional NPL transfers totalling RMB 780 billion since 2004 ..........................176. Recapitalising the fifth largest Chinese bank in 2005 ...........................................177. Foreign equity participation...................................................................................188. Cleaning up the rural credit cooperatives and city commercial banks...................209. The changing role of Chinese bank customers......................................................2010. Interbank swaps of subordinated debt ...................................................................21
IV. I
MPLICATIONS
.............................................................................................................22
1. Balance sheet impact.............................................................................................232. Headline versus effective restructuring costs ........................................................233. Longer-term implications......................................................................................25
V. C
ONCLUDING REMARKS
..............................................................................................28R
EFERENCES
........................................................................................................................29A
PPENDIX
1..........................................................................................................................31A
PPENDIX
2..........................................................................................................................32L
IST OF WORKING PAPERS RELEASED BY
CEPII...............................................................33
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