Citi Group recently purchased the non-performing assets of Bank of China through auction and tendering, Ms Wu, spokeswoman of Citi Group (HK), said last week.

Wu said the two sides sealed the deal last week. However no official confirmation can be found on the websites of either Citi Group or Bank of China.

The bad assets were in the form of loans to about 450 companies in Hong Kong and mainland, which mostly mortgaged their Hong Kong real estate through the HK affiliate company of Bank of China.

This year the four main banks have begun to deal with their bad assets. The Industrial and Commercial Bank reached an agreement with Goldman Sachs in June to establish an equity joint-venture in order to jointly deal with its non-performing assets. However, the project has not been approved yet.

Actually, bad assets are a kind of resource to restructure and to be taken advantage of, said Li Yanbing, manager of risk department, the Agricultural Bank.

The disposition of bad assets is always a big problem to the four main banks. There is controversy over whether the Ministry of Finance shall write off the bad assets of the four banks.

The solution to the problem lies in improving the banks' internal management system, said Li Yong, vice minister of finance. Li said state-owned banks should solve the problem by themselves. In addition, the China Banking Regulatory Commission promote future dispositions of bad assets.

(Xinhua News Agency November 18, 2003)