SHANGHAI (Nov 25): China’s banking regulator expanded a trial to allow more regions including Beijing to set up firms to buy bad loans from local financial institutions, government officials familiar with the matter said.

The latest batch also covers the municipalities of Tianjin and Chongqing, and Fujian and Liaoning provinces, said the people, who declined to be identified as the additions haven’t been publicly announced.

The China Banking Regulatory Commission in July allowed five places including Shanghai to set up companies to manage sour debt for the first time.

Chinese banks are grappling with nonperforming loans that jumped by the most since 2005 in the third quarter as the nation’s economy heads for the weakest expansion since 1990.

Adding more localized buyers to the four national bad-loan managers such as China Cinda Asset Management may help lenders clean up their books more quickly and dispose of soured credit at a better price.

The Economic Information Daily reported the approval earlier, adding that places including Ningxia and Shandong are also seeking to set up bad-loan managers.

The CBRC didn’t immediately respond to faxed request for comment today.

The five new bad-loan companies are Beijing Guo Tong Asset Management, Chongqing Yufu Assets Management Group, Tianjin Jinrong Investment Service Group, Fujian Mintou Asset Management, and Liaoning State-Owned Asset Management, the people said.

Officials for the firms couldn’t immediately be reached for comment.