As early as late June, industry insiders reported that multiple provincial-level AMCs had received window guidance, with license arbitrage through pass-through activities being halted. Recently, a local AMC investment manager disclosed that the pace and intensity of the cleanup have far exceeded expectations, noting that regulators directly issued a suspension order, which was unforeseen.
On July 24, 2026, the Chongqing Municipal Financial Regulatory Authority announced an administrative penalty against Chongqing Fucheng Asset Management Co., Ltd. (referred to as Chongqing Fucheng Asset), a local AMC under its jurisdiction. The company was ordered to suspend operations for disguisedly lending or leasing its financial business license. This marks the first suspension order targeting non-performing asset pass-through activities in the industry. On July 25, 2026, inquiries were made to Chongqing Fucheng Asset regarding the suspension period, disposal of existing assets, and remediation plans for outstanding pass-through projects, but no response was received by the time of publication.
The first suspension order in the AMC industry is issued
Chongqing Fucheng Asset was established in 2017 as the second local asset management company (local AMC) approved by the Chongqing municipal government, with a registered capital of 1.5 billion yuan. Its core mandate is to take on non-performing loans from local banks and mitigate regional financial risks. The penalty coincides with the one-year anniversary of the "Interim Measures for the Supervision and Administration of Local Asset Management Companies" (Jin Gui [2025] No. 16), referred to as the 2025 New Rules. These rules explicitly require that AMCs must hold, independently dispose of, and genuinely bear risks for bulk acquisitions of financial non-performing assets, strictly prohibiting practices like shell transfers or license leasing. The penalty against Chongqing Fucheng Asset has become a landmark event in the regulatory crackdown on license arbitrage.
From a performance perspective, the company performed reasonably well in its early years. In 2019, it reported revenue of 1.45 billion yuan and net profit of 323 million yuan, ranking in the upper-middle tier within its region. However, by the first half of 2020, performance drastically reversed, with revenue dropping to just 43 million yuan and a net loss of 156 million yuan, against total assets of 9.033 billion yuan, signaling significant operational pressure. On the legal front, the company has been listed as an enforcement target over a dozen times in recent years, with amounts ranging from tens of thousands of yuan to 172 million yuan. Its legal representative has faced multiple travel restrictions, and the company was placed on the dishonesty list in August 2024, continuing to accrue new records into 2025, indicating ongoing credit risk exposure.
In terms of business strategy, Chongqing Fucheng Asset had long targeted the individual loan non-performing asset sector. In 2024, during the highly anticipated auction of a 26 billion yuan individual loan non-performing asset package from consumer finance company Home Credit, Chongqing Fucheng Asset participated in the bidding but ultimately failed to secure it. Entering 2026, based on public transfer results from the Banking Credit Asset Registration and Transfer Center (BCARTC), the company secured only two small asset packages in the second quarter, from Gansu Rural Commercial Bank and similar institutions, with winning bids of 750,000 yuan and 3 million yuan, reflecting a relatively small business scale. The investment manager noted that Chongqing Fucheng Asset becoming the first local AMC ordered to suspend operations was surprising, as other local AMCs actively involved in pass-through activities remain operational.
The survival economics behind license arbitrage
According to the "Management Measures for Non-Performing Asset Business of Financial Asset Management Companies" and BCARTC rules, entities eligible to purchase bulk transfers of bank non-performing assets are limited to five national AMCs and licensed local AMCs. The 2025 New Rules further emphasize "genuine self-holding, independent disposal, and substantive risk assumption," explicitly banning pass-through arbitrage. However, investigation reveals that among private local AMCs, pass-through business remains a critical, albeit hidden, lifeline for survival. Based on business models, market participants are polarizing into two groups: one is the "self-purchase and self-hold" faction, primarily provincial state-owned AMCs, which leverage local bank resources and low-cost long-term capital to acquire assets with their own funds and build in-house teams for disposal, generating stable cash flows through refined recovery efforts. The other is the "pass-through arbitrage" faction, dominated by some private AMCs. Against a backdrop of shrinking profits from corporate business and compressed margins for genuine individual loan disposal, pass-through business has become a survival pillar for private AMCs lacking local resources and long-term funding support.
Their operational model involves using licensing advantages to participate in auctions, with actual equity contributions from their own funds being very low, typically just 5% to 20%. After winning a bid, they transfer 80% to 95% of the debt's beneficial rights to downstream actual buyers, charging a pass-through service fee of 2% to 5% of the winning bid amount. They avoid assuming subsequent disposal risks, with some agreements including a small share of any excess recovery, such as 5% of the surplus. This has made them the most frequent bidders in the market since 2024. Downstream buyers mainly include law firms, collection groups, bulk debt disposal service providers, industrial private equity funds, special asset investment capital, and supporting entities like loan assistance and credit technology platforms. According to estimates from Mr. Liu, head of a collection group involved in individual loan pass-through business since 2024, about 30% of individual loan transfers on the BCARTC from mid-2024 to date involve some form of bridge financing or beneficial rights transfer arrangement, with certain licensed AMCs in North and Northwest China serving as primary pass-through channels.
"We've received too many collection complaints," said Wang Li, an investment manager at a local AMC engaged in pass-through business. Due to numerous complaints from downstream collection agencies improperly contacting debtors' employers or harassing third parties, the company suspended new individual loan projects from March 2025 after receiving regulatory rectification notices. With limited proprietary funds and no in-house collection team, the gross margin from self-purchase and self-hold is estimated at less than 3%, so the company currently relies on existing outsourced collection projects to maintain revenue. Downstream collection agencies have capital and disposal capabilities but lack licenses, while AMCs hold licenses but have insufficient funds and disposal skills. Banks face pressure to offload assets but are restricted by a whitelist of qualified buyers, creating a natural foundation for tripartite cooperation. Until genuine disposal gross margins can cover the operating costs of licensed institutions, pass-through business is likely to persist in more concealed forms, such as "entrusted disposal" or "technical services."
Individual loan business is gradually becoming a pillar
"Before 2025, 90% of our company's profits came from corporate projects. Now, the corporate line is essentially shelved, and we rely on individual loans to fill the gap, even using profits from these projects to offset losses from some corporate ones," said Chen Ning, a business vice president at a provincial-level AMC in South China, in a recent conversation. The business transformation of local AMCs is evident in their 2025 annual reports, which have been released recently. Corporate disposal business is generally weakening, while individual loan business has emerged as a key driver of stable cash flows and meeting regulatory benchmarks. For example, leading institution Zhejiang Asset Management reported consolidated revenue of 5.619 billion yuan in 2023, which fell to 5.425 billion yuan in 2024, and further contracted to 4.657 billion yuan in 2025, with the decline accelerating to 14.16% year-on-year. Under this performance pressure, the company aggressively expanded into individual loans in 2026, winning multiple asset packages with a total principal and interest amount exceeding 5.2 billion yuan. Notably, a single package of personal consumer loans from China Post Consumer Finance in the second quarter of 2026 had a winning bid exceeding 100 million yuan.
Based on a review of BCARTC transfer results, local AMCs such as Kumpeng Asset Management, Tianjin Binhai Zhengxin Asset Management, and Guangxi United Asset Management have become the most active bidders in the individual loan non-performing market, with this business now forming a core revenue pillar. Additionally, in 2026, more local AMCs are transitioning into the individual loan sector. Entities like Haide Asset Management, Shaanxi Financial Asset Management, Jinyang Asset Management, and CITIC Qingdao Asset Management are among dozens that have made their first moves in individual loan non-performing asset deployment this year. "In 2024, we would still allocate some corporate secured packages to balance returns, but in 2025, the board directly blocked new investments in corporate projects," Chen Ning admitted. A corporate package worth hundreds of millions of yuan can remain unresolved for years, making it hard to count toward annual performance indicators. In contrast, acquiring individual loans in batches allows for quarterly performance assessments, making the cost-benefit analysis starkly clear. Since early 2025, individual loans have been the company's primary revenue source.
Massive information, precise interpretation, all on Sina Finance App. Editor: Cao Ruitong.