Analysis: How Some Chinese Banks Ended Up in a Property Purgatory

From Nov. 19 to Nov. 20, Inner Mongolia Rural Commercial Bank put 57 homes up for auction on Alibaba’s asset auction platform —bare-shell apartments in Hulunbuir listed at slightly below market rate. As of Nov. 28, not one had sold, and not a single user had registered to bid.

The bank is far from alone. A Caixin review found that lenders across China — including the “Big Six” state-owned banks — are listing all manner of real estate on auction platforms, from apartments and shops to office buildings and parking garages. Many of these properties arrived via debt-for-asset swaps: after failing to sell at court-ordered auctions, ownership was transferred from the debtor to the bank. These properties are distinct from judicial auction properties because the banks hold title.