OREANDA-NEWS. September 21, 2015.  China Cinda Asset Management Co., Ltd.'s (Cinda; A/Stable) ratings will not be affected by its proposed acquisition of Hong Kong-based Nanyang Commercial Bank (NCB). The deal will not change the state's controlling ownership in Cinda nor the company's role as a stabilising force in China's financial system. The acquisition could be credit positive over the medium to long term if Cinda maximises synergies created between NCB and its core business of distressed asset management.

Cinda said that a wholly owned offshore subsidiary Cinda Financial Holdings Co. Ltd. submitted a bid on 25 August 2015 for NCB. The seller BOC Hong Kong Holdings Ltd said it was seeking HKD68bn (USD8.7bn) from the transaction. NCB is a small bank with branches in Hong Kong and China.

In Fitch's view, the acquisition would open new channels for Cinda to manage and dispose of non-performing assets, making the company more competitive in the distressed asset management industry.

Cinda's management has affirmed its commitment to distressed asset management and other policy roles mandated by China's Ministry of Finance. In Fitch's view, Cinda will remain an important force in mitigating financial risks and promoting the reform and development of China's financial system, and it will continue to implement government policy. Fitch expects Cinda and the other state-owned asset management companies (AMCs) to play an increasingly important and strategic role as the Chinese economy rebalances away from investment-led growth.

Cinda's state ownership and strong control by the government underpin Fitch's expectation that strong and timely government support would be forthcoming, if needed. As a result, Cinda's credit profile is linked to that of the Chinese sovereign (A+/Stable).

Cinda was established in 1999 and is one of four AMCs approved and set up by the State Council to safeguard the country's economic and financial stability. The finance ministry held an 83.46% stake before an IPO in December 2013 diluted the ministry's stake to 67.84%. Cinda and the other three AMCs have a unique market niche protected by regulations. For example, the acquisition of bulk or large-size non-performing assets, along with the subsequent repackaging and disposal, can only be done by these four AMCs.