Chinese shadow bank admits L30bn shortfall after 'management ran wild'
Source: The Guardian
Chinese shadow bank admits £30bn shortfall after ‘management ran wild’
Zhongzhi, a wealth manager with links to China’s ailing property market, says it is ‘severely insolvent’
Amy Hawkins Senior China correspondent
@amyhawk_
Thu 23 Nov 2023 13.13 GMT
Last modified on Thu 23 Nov 2023 13.50 GMT
One of China’s biggest financial conglomerates with links to the country’s ailing property market has admitted a shortfall of nearly £30bn as it warned investors that it is “severely insolvent”.
Zhongzhi, an asset and wealth management company in China’s shadow banking sector, said its total assets amounted to 200bn yuan (£22.5bn) against obligations of up to 460bn yuan, in a letter to shareholders issued on Wednesday.
In the letter, the company blamed its brewing insolvency crisis on the departure of several senior executives, which left a situation in which “internal management ran wild”, the Financial Times reported.
The group’s troubles first came to light when one of its trust companies, Zhongrong International Trust Co, missed payments on several investment products over the summer. Zhongrong’s assets are thought to be largely property-related.
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Original Guardian link (registration required): https://www.theguardian.com/business/2023/nov/23/chinese-shadow-bank-zhongzhi-30bn-shortfall-china-property-market
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