Six months after a former bank official was executed on suspicion of corruption, China is investigating an executive of one of the largest state-sponsored non-performing loan management companies on suspicion of bribery.
According to a statement released by China Banking and Insurance Regulatory, Hu Xiaogang, vice president of wealth management in the Great Wall of China, suspected of a “serious” breach by the Central Commission for Discipline Inspection, China’s anti-corruption oversight body. Under investigation. Fee.
The survey is the latest indication of potential financial fraud at the top of China’s “bad debt” asset managers, raising concerns about high debt levels and declining earnings.
Groups that include Huarong Asset Management and China Cinda Asset Management Enhanced surveillance By regulators and investors as Beijing tackles the dangerous elements of the country’s financial system, which it believes threatens economic stability.
A CBIRC statement mentions Mr. Hu’s previous role as vice president of another large distressed bond investor, China Orient Asset Management, allegedly in his role at Great Wall. No suggests that it is related to his nearly 20 years of tenure in the group.
China’s four non-performing loan managers were established in the aftermath of the Asian financial crisis in the late 1990s. They were designed to mitigate the risk of the country’s largest state-owned lenders by removing bad debts from their books before listing on the stock market.
But the group Serious problem for Beijing Since then, with debt of over $ 100 billion, it has aggressively expanded its sector beyond its scope of business and has grown rapidly into a financial conglomerate.
Huarong and Cinda are listed in Hong Kong, but Great Wall and Orient remain private. According to S & P data, all four companies expanded their overseas assets significantly between 2015 and 2017.
China’s largest non-performing loan investor, Huafu Asset Management, has about $ 22 billion in dollar-denominated debt. Intense market pressure About delay in publication of annual results. The company’s Hong Kong-listed stock was suspended in April, but bond prices were volatile.
Lai Xiaomin, 58-year-old former Huarong top Was executed After being convicted of bribes and other crimes worth $ 280 million in January.
Crackdown is a sign of the patience of the anti-corruption movement over many years of Xi Jinping Jintao of China. This campaign is, outside from the experts China, while threatening a potential challenger from within the Chinese Communist Party to power of Xi Jinping, and the government and business organizations rooted deeply regarded as a means to target.
The debt problem of state-sponsored distressed loan managers has emerged against the backdrop of growing concerns among international investors. Default number of records And a sharp increase Downgrade Hit China’s financial sector. More than $ 100 billion of dollar-denominated debt borrowed by Chinese companies this year will be due.
Zeng Gang, Deputy Director of the National Institution for Finance and Development, said CBIRC Enhanced surveillance State-owned Shanghai Securities News reported this month that the country’s asset management firm was part of an effort to mitigate risk by increasing its focus on debt disposal.
The Ministry of Finance of China is considering transferring shares in the top four countries of the non-performing loan group to a new holding company as a way to further mitigate the risk of the financial system, according to people familiar with the situation in Beijing. ..
Fitch Ratings Huarong downgrade In late April, the issuer’s rating was tripled from A to B. However, the rating groups maintain a stable outlook and A ratings for the Great Wall, Cinda and Orient, and also note that each group enjoys strong implicit state support.
Perpetual bonds on the Great Wall fell slightly on Wednesday, trading at 97.8 cents per dollar.
Additional report by Sherry Fay Ju in Beijing
China investigates corruption of bad debt executives
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