China's ICBC to launch asset-backed securities soon

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BEIJING, Sep 24 (Reuters) Industrial and Commercial Bank of China (ICBC), the country's largest lender, said on Monday it would soon issue about 4 billion yuan (3 million) in asset-backed securities (ABS).

CITIC Securities will underwrite the product, which will be backed by loans and issued in the interbank market, ICBC said in a statement, without providing an exact date.

''We will continue to expand the business of securitising assets that are suitable,'' Yang Kaisheng, the bank's president, told reporters on the sidelines of a promotional event.

China's central bank last month set out a series of requirements on full and accurate disclosure of the asset pools involved in securitised products.

The move came as trouble with securities backed by risky U.S.

subprime mortgages continues to roil global markets.

Beijing has said it has only limited exposure to subprime but can take lessons from it.

''Securitisation itself is a good tool. But if not used properly, it will cause problems,'' said Shen Bingxi, deputy head of the People's Bank of China's financial market department.

''We should not conclude that cars are a problematic means of transport simply because a certain driver had an accident,'' he said at the same event.

China is now entering the second stage of a pilot scheme for securitisation that was pioneered by China Development Bank and China Construction Bank, with three issues worth 13 billion yuan in late 2005 and early 2006.

As part of the second round of the pilot, Shanghai Pudong Development Bank issued 4.4 billion yuan in ABS earlier this month.

So far, the market has not yet taken off in the way many had expected.

Fitch Ratings said in late 2006 that it expected securitisation in China to gather momentum this year, with 10 deals totalling 50-100 billion yuan to come to market from the first quarter onward.

Yang said the relatively slow start was because banks tended to look at securitisation as a method primarily for getting less well-performing assets off their books.

As that mindset gradually changed, more institutions would probably show more interest in securitisation, even of better assets on their books, he said.


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