In 1999, China established four asset management companies AMCs to clean up non-performing loans at the big state-owned banks. In a new twist, one of them, China Cinda Asset Management, is stretching the notion of disposing dud assets.
One of its charges was Hantang Securities, a mid-sized securities house in Shenzhen that was put into Cinda's custody in September, 2004 after it lost huge sums speculating in the bond market. Among Hantang's clients was PICC Property and Casualty, China's biggest non-life insurer, for which it managed nearly $50 million and has not been able to pay back.
Hantang's sudden collapse and takeover by Cinda occurred just...
