1.3b yuan loss looms for investors in wealth products
Thursday, February 13, 2014
Two investment products worth nearly 1.3 billion yuan (HK$1.66 billion) that were distributed by China Construction Bank (0939) and Ping An Insurance (2318) are on the verge of default.
The first - a high-yield product that saw 289 million yuan raised from clients of China Construction Bank - was created by Jilin Province Trust and backed by a loan to coal firm Shanxi Lianmeng Energy.
"It matured on February 7, but CCB passed on an announcement from Jilin Trust saying `we currently can't be certain when [Lianmeng] funds will be returned," Shanghai Securities News reported.
Though the maturity date has already passed, thereby constituting a technical default, the Jilin trust appears to be working to recover investor funds.
"Restructuring isn't bankruptcy. As far as we know, there is no problem with the firm's assets. The firm is in negotiations with investors," the paper quoted an unnamed trust official as saying.
The second saw three funds backed by Beijing Roll- in Investment Management fail to repay investors after maturity. Capital plus interest on the product has reached one billion yuan, 21cbh.com reported.
Investors in Beijing claimed they bought the funds from Ping An Insurance. "[Ping An staff] promised to repay capital and interest. They claimed it is guaranteed by local governments and are deposited in Ping An Bank..." an investor said. But Ping An Insurance said it did not distribute such funds. LING WANG AND REUTERS