China’s senior bad debt officer investigating corruption

Six months after a former senior bank official was executed on corruption charges, China is investigating whether an executive at one of its largest state-backed bad debt management companies was involved in corruption.

A statement issued by the China Banking and Insurance Regulatory Commission stated that Hu Xiaogang, vice president of China Great Wall Asset Management Corporation, is under investigation by the Central Disciplinary Inspection Commission, the national anti-corruption supervision agency, for suspected “serious” violations. Committee.

The investigation is the latest sign of possible financial misconduct by China’s top “bad debt” asset management companies as concerns about their high debt levels and declining profits have intensified.

Groups including Huarong Asset Management and China Cinda Asset Management have been Strengthen review Regulators and investors are struggling to deal with risk factors in China’s financial system, which it believes will threaten economic stability.

The China Banking Regulatory Commission’s statement mentioned that Hu had previously served as the vice president of China Orient Asset Management Corporation, another large distressed debt investor, implying that these allegations were related to his nearly two-year tenure with the group, rather than his role in Great Wall.

The four largest bad debt management companies in China were established after the Asian financial crisis in the late 1990s. They aim to reduce the risk of the country’s largest state-owned bank by removing bad debts from the books of accounts before the stock market goes public.

But the group has become Serious problems in Beijing After they raised more than 100 billion U.S. dollars in debt, they actively expanded into areas beyond their mandate and quickly developed into a financial conglomerate.

Although Huarong and Cinda are listed in Hong Kong, Great Wall and Dongfang remain privately owned. According to Standard & Poor’s data, the overseas assets of these four companies have all expanded substantially in 2015-17.

China’s largest distressed debt investor Huarong owes approximately US$22 billion in US dollar-denominated debt and faces Huge market pressure Postpone the announcement of its annual results. The company’s Hong Kong-listed stocks were suspended from trading in April, and its bond prices have been volatile.

Lai Xiaomin, 58-year-old former head of Huarong Executed In January of this year, he was convicted of taking bribes of US$280 million and other crimes.

This crackdown marks the endurance of Chinese President Xi Jinping’s anti-corruption campaign for many years. Experts outside of China believe that the campaign is both a means to target deep-rooted government and corporate corruption and potential challengers who threaten Xi Jinping’s power from within the Communist Party.

Against the background of growing international investors’ concerns about debt problems, the debt problems of state-backed non-performing loan management companies have also emerged. Record the default number And increase dramatically Downgrade Impact China’s financial industry. More than 100 billion U.S. dollars in US dollar debt borrowed by Chinese companies will mature this year.

In this regard, China The Ministry of Finance is considering Bloomberg News reported last month, citing unnamed sources, that the country’s shares in the four major bad debt groups were transferred to a new holding company to further reduce risks in the financial system.

Great Wall Perpetual Bonds fell slightly on Wednesday, trading at 97.8 cents per US dollar.

Additional reporting by Sherry Fei Ju in Beijing

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