TWO of China's four state asset managers have launched securities subsidiaries to expand business after finishing the clean-up of banks' sour debt.

China Huarong Asset Management Corp and China Cinda Asset Management Corp yesterday kicked off operations of their securities units, the two companies said separately today.

Huarong Securities Co has registered capital of 1.51 billion yuan (US$201 million) with China Huarong Asset providing 1.5 billion yuan and China Gezhouba (Group) Corp contributing 10 million yuan.

Cinda Securities Co, which has a registered capital of 1.511 billion yuan, has received 1.5 billion yuan in funds from China Cinda Asset, nine million yuan investment from Zhonghai Trust & Investment Co and two million yuan from China National Materials Industry Group.

China's central government created four asset management companies in 1999 -- Great Wall, Cinda, Huarong and China Orient -- to help clear up the balance sheets of the nation's four biggest banks.

All the AMCs concluded clearing up billions of yuan worth of bad debts at the lenders in a government-directed campaign early this year and are on track to transform themselves into financial institutions for commercial operations.

China Orient Asset Management Corp has also won regulatory approval to set up a securities subsidiary. The new firm, called Dongxing Securities Co, will be based in Beijing with registered capital of 1.504 billion yuan, it has said.

The stock regulator may temporarily halt the approval process for new domestic securities firms after granting brokerage licenses to the three state asset managers, the Shanghai Securities News said early this month.

The market watchdog is also expected to re-allow foreign institutions to form joint-stock investment banks with local partners soon and let them invest in mainland brokers after a one-year hiatus to facilitate an industry overhaul.