(Yicai) Jan. 26 -- China Huarong Asset Management, one of the nation's four so-called ‘bad banks,’ has been officially renamed China Citic Financial Assets Management, as the major bad loans manager aims to turn the page and become profitable again.

Citic Financial Assets completed all of the necessary paperwork yesterday and secured a business license from Beijing’s market regulator, the firm, which is based in the capital city, said today.

Huarong was founded in 1999 after the Asian financial crisis to manage non-performing loans while helping state-owned banks restructure and reform. It went public on the Hong Kong Stock Exchange in October 2015.

The firm’s shares [HKG: 2799] sank 4.1 percent to CNY0.35 (5 US cents) apiece in Hong Kong today, extending their decline to 12.5 percent since the end of last year.

Citic Group became Huarong’s largest shareholder with a nearly 26.5 percent stake after a group of state-owned investors bought into the insolvent firm in August 2021. Due to poor management, Huarong had a net loss of CNY102.9 billion (USD14.3 billion) and an asset impairment of CNY107.8 billion in 2020 alone.

The shareholder shake-up has resulted in new management. Liu Zhengjun, deputy general manager of Citic, chairs Citic Financial Assets. Citic also picked other key executives for the bad assets manager such as the president, chief financial officer, and chief risk officer.

On Jan. 22, the company said it expected to have returned to the black last year, with a net profit of between CNY1 billion and CNY2 billion (USD140.9 million and USD281.7 million). 

Four days earlier, Moody’s Investors Service had downgraded the firm to junk status, lowering its long-term rating by one level to Ba1 with a negative outlook, citing concerns arising from the plight of China’s property sector.

Editors: Tang Shihua, Emmi Laine