The second international competitive sale transaction of mortgage asset portfolio of CCB recently ended successfully. CCB signed the asset transfer agreement and transaction capital custody agreement with the joint bidding team composed of DAC Management, LLC and the French bank Calyon.

The success of the transaction marks an innovation of mortgage assets disposal in China. It is the first time that the seller dose not set the reserve price for bidding (minimum price) but adopts the maximum fair price determined by market according to international practice.

The transaction is open to domestic and foreign investors in the form of an independent asset package. It is a 100% outright sales transaction through sealed bids and the assets are sold to the qualified investor who offers the highest price. The asset portfolio has a book value of RMB 960 million and covers 177 properties, mainly including office buildings, shopping malls, retail stores, houses, warehouses, factories, land and a small number of machine equipment in Guangdong Province.

Eight experienced foreign investors registered in the transaction, including the largest multinational bank and investment bank in the world. On the auction day, CCB received the open competitive offers of three investment groups composed of four registered investors. The bidding group composed of DAC Management, LLC and the French bank Calyon win the bidding with the highest offer equal to 19 percent of the assets portfolio value. CCB invited Ernst & Young Hua Ming as the financial consultant, King & Wood PRC Lawyers as the legal consultant and DTZ Debenham Tie Leung as the international assessor for the transaction.

According to Chen Jialiang, a partner of Ernst & Young and expert of NPA disposal in China, the transaction sets an effective and workable model for the volume disposal of mortgage assets in China. The open market transaction instead of setting the reserve price will become a milestone of Chinese financial reform and an industry standard for the future disposal of NPA in China.