Spot-lite: Chinese trust fails to repay principal, investors protest

China Business News (CBN)

Banner reads ‘Tricky ICBC, payback my blood and sweat money!’

The storm continues to brew over China Credit Trust Company’s delay of fund principal repayment.

This is the second time a China Credit Trust fund has run into trouble. Earlier in the year, their Credit Equals Gold #1 fund also warned of delaying payment, however an unnamed investor stepped in at the last minute, and investors received all their money back.

This time round it’s the trust company’s Credit Equals Gold #2 fund, which was established on July 26th 2011, with a three year term period, and distributed by a Shanxi branch of ICBC. The fund raised over 1.3 trillion yuan for the Shanxi New Northern Group, to aid mine investments, modernise technology, and upgrade related mine facilities.

China Credit Trust had already warned investors of a possible delay in payment. One day before principal amount was due, the trust company announced it would extend the repayment date, and convert the underlying assets into cash within 15 months. The public notice also urged all investors to contact ICBC directly.

Yesterday afternoon, ICBC’s head office said that the bank’s private banking department general manager Ma Jian 马建 had already spoken with investors, and will fly back to Beijing this week to pass on the investors concerns, hoping to provide an answer sometime next week.

One investor told CBN that from the very beginning through to purchasing the product, he had only ever dealt with ICBC, never seeing anyone from the China Credit Trust Company.

Yesterday at 10 am, investors began arriving at ICBC’s Shanghai branch on the Bund. Upon seeing the growing numbers of investors congregating in the main reception hall, the bank invited them for discussions in a second floor meeting room. After only processing formalities, the investors became impatient, requesting to see the bank’s president.

One investor said “It’s like this every time, they just ask us to register our ID information, but can’t help us with any of our problems”.

Another investor commented on the minimum investment threshold of 3 million yuan (around half a million dollars), saying “I’m sixty years old this year, 3 million yuan is my old age pension”.

And this is the telling difference. These are obviously wealthy individuals who can have their voice heard by the bank, and protest in a civilized manner.

But as one Beijing government official told chiecon, the biggest fear of shadow banking from the government’s point of view, is a series of trust defaults causing bank runs. Imagine the chaos if millions of retail investors were to lose their savings and take to the streets.

(Article not to be copied or reproduced without permission or citation).

Chiecon originally first and only site to translate & publish this story in English on the internet. Mainstream media, after reading this translation, copied / tweaked contents to produce same story on their websites:-

Wall Street Journal

Aug 13th 2014:


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