To contain the fallout from the Asian financial crisis two decades ago, Beijing set up a group of bad banks and packed them with the country’s most toxic debts. But with deepening distress in China’s property sector threatening to spark wider economic turmoil, those bad banks are now struggling to help.

The problem is that the balance sheets of China’s “Big Four” asset management companies — China Cinda Asset Management, China Huarong Asset Management, China Great Wall Asset Management and China Orient Asset Management — have become so bloated that their capacity is restricted.

The groups are “financial monsters”, said Chen Long, a partner at Beijing-based consultancy Plenum. “I would not count on them to play a big part” in addressing the property crisis,” he added.