Wednesday, June 08, 2005
I really don't know how much is lost through this kind of corruption, but from my interviews, it seems that things are getting better. In 2001, foreign bankers demanded a really low price from the Chinese government because there was such an informational vacuum. So even legal deals approved by the State Council were sealed below market price. But as the market became more established and as Chinese real estate prices increased, deals became more transparent, and prices for NPLs rose. I have even heard of some cases where investors paid full face value for some collateral in Guangdong...etc. Also, the most recent transfers include much better quality assets that are expected to yield over 30% of face value.