China Huarong Asset Management Corporation said yesterday it won regulatory approval for the establishment of joint ventures (JVs) with foreign investors to dispose of massive distressed assets it put up for international auction at the end of last year.

This marks the end of the approval process for the company's 25 billion yuan (US$3 billion) second international auction of bad assets. It found buyers for 17 packages of the assets - with a combined book value of 22.2 billion yuan (US$2.7 billion) - out of a total of 22 packages.

The company also said the Chinese Government is working on detailed rules governing the sale of non-performing assets to foreign investors, which aim to improve transparency, ensure regulatory effectiveness, and simplify the typically long approval process.

All of the six joint ventures Huarong has set up with foreign investors to resolve bad assets from its second international auction have so far completed registration procedures, it said.

Lehman Brothers, Goldman Sachs, Morgan Stanley and UBS AG each has one joint venture with Huarong, while JPMorgan Chase has two. Huarong did not disclose the exact amount of assets it sold to the joint ventures, but one official told China Daily they bought 11 of the 17 packages and the total value was "more than 10 billion yuan (US$1.2 billion)."

"Related asset clearings are underway, and are expected to be completed by the end of the year," a Huarong spokesman said.

The company sold off two packages to Citigroup, and another three to Aoyier, a Chinese company. It failed to ink a deal on the last one of the 17 packages.

The spokesman said it took Huarong less than six months to get approval for the joint ventures, shorter than the widely-cited 16 months it spent waiting for approval for its 10.8 billion yuan (US$1.3 billion) first international bad asset auction in 2001.

He attributed the relatively fast approval process to "strong support" from regulators at government agencies such as the National Development and Reform Commission, the Ministry of Commerce and the State Administration of Foreign Exchange.

"The State has always been encouraging and supportive of ushering in foreign capital to participate in China's non-performing asset resolution," he said.

"The quick approval this time fully reflected that."

But foreign investors have complained about the inadequate flow of transactions in China's huge distressed debt market, and have expressed concerns about what they see as a widespread reluctance among individual officials to approve deals, as well as legal barriers.