Goldman SachssgroupsInc Chairman Henry Paulson signed an agreement to help China's biggest bank dispose of as much as US.2 billion of bad loans, the first direct venture with a Chinese lender.

　　Goldman, the world's third-biggest securities firm, and state-owned Industrial & Commercial Bank of China, will form a venture to dispose of between 8 billion and 10 billion yuan (US.2 billion) of loans.

　　"It's very real reform," Paulson said. "It's the first joint venture with a bank."

　　Direct sales by banks would give overseas investors access to about US billion of dud loans accumulated in the past eight years by the nation's four biggest banks. Previously, they could only bid for US billion of the worst loans incurred before 1995, which were bought by four asset management companies.

　　Goldman has a venture with Huarong Asset Management Corp, which is disposing of some of ICBC's bad loans. In February, the venture said it will buy bad loans and real estate assets with a face value of 1.9 billion yuan.

　　Goldman also signed an agreement last October with Great Wall Asset Management Co to buy 8.1 billion yuan of bad loans extended by Agricultural Bank of China - a venture that hasn't yet received Chinese government approval.

　　At the end of March, China's four asset management companies had sold 343.5 billion yuan of bad loans, recovering 71.5 billion yuan, or 21 cents on the dollar, the People's Bank of China said in April. Goldman said in 2001 that it was paying an average of 10 cents on the dollar for Huarong loans.

　　The four biggest state-owned lenders - ICBC, Bank of China, China Construction Bank, and ABC - make up about two-thirds of the nation's loans and de-posits. At the end of the first quarter, 24.1 percent of their loans were not performing.

　　Reducing bad loans would expedite plans by the banks to sell shares during the next few years.

　　Great Wall Asset Management disposed of 110 billion yuan of bad loans. Orient Asset Management Co, which manages bad debts for Bank of China, sold 48.3 billion yuan. China Cinda Asset Management Co sold 88.7 billion yuan in bad loans and assets it took over from China Construction Bank. Huarong sold 96.4 billion yuan of bad assets.