Banking Crisis
China's ICBC To Rescue Investors In "Shadow Banking" Product As Deadline Looms
Following recent worries about the first-ever default of its kind on such wealth management products, media reported that China Credit Trust said it has reached an agreement on a potential investment in a troubled RMB3 billion ($496 million) high-yield product distributed by Industrial & Commercial Bank of China.
Following recent worries about the first-ever default of its kind
on such wealth management products, media reported that China
Credit Trust said it has reached an agreement on a potential
investment in a troubled RMB3 billion ($496 million) high-yield
product distributed by
Industrial & Commercial Bank of China.
The Beijing-based trust company reportedly said individuals who
put money into the Credit Equals Gold No. 1 trust product should
contact their ICBC financial advisor for more details.
This publication attempted to contact China Credit Trust and ICBC
for further information on the matter, but had not received a
response at the point of going to press.
The story has underlined a concern about how vulnerable China’s
banking and associated financial markets really are after years
of breakneck growth; there remain concerns about the standards of
disclosure and transparency in this sector.
This part of the “shadow banking” system would be hit by a
default in China’s $1.67 billion (source: Bloomberg)
trust products market. The particular product in question was due
to mature on 31 January.
Credit Equals Gold was used to raise funds for Shanxi Zhenfu
Energy Group, which went bust after its owner Wang Pingyan was
arrested in 2012 for illegally collecting deposits, as previously
reported.
The problems in the product have rattled the derivatives market
for insuring against defaults on bonds and loans. According to
Bloomberg, credit traders have taken out the most
protection on China’s debt in 14 months. The net notional amount
of credit-default swaps outstanding on Chinese sovereign bonds
totalled $9.125 billion on 17 January, the highest amount since
November 2012, according to weekly figures published by
Depository Trust & Clearing Corp, the news wire said.
