China’s Bad Debt Managers Risk Becoming Bad Credits Themselves

China’s Bad Debt Managers Risk Becoming Bad Credits Themselves
Investors check stock information on computers at a brokerage house in Shanghai, China on Aug. 25, 2015. Aly Song/Reuters
Reuters
Updated:

SHANGHAI/SINGAPORE—China’s bad debt managers, whom Beijing hopes to play a key role in resolving financial risks, are in danger of becoming bad credits themselves as the leverage crackdown that fueled a boom in their business now threatens their own access to funding.

The practice of buying banks’ non-performing loans (NPLs) at a discount and recovering them for a profit has grown rapidly in China since 2016.