Trust Estate

China's Booming Trust Sector Catching Up with Banking

Chrissy Coleman, Asia Correspondent, March 19, 2013

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Industry assets under management for China’s 65 trust companies reached RMB8.27trillion ($ 1.4 trillion) by the end of February.

Industry assets under management for China’s 65 trust companies reached RMB8.27trillion ($ 1.4 trillion) by the end of February, climbing RMB800 million in the past three months, Z-Ben Advisors has said.

In 2012, the industry’s RMB7.47 trillion in AuM saw a 55 per cent year-end increase over the previous year, overtaking the insurance sector (RMB7.35 trillion) in size. "Now second only to the banking sector in asset count, trusts have maintained an annual growth rate upwards of 50 per cent since 2009," Z-Ben said in a statement this week.

“Although brokerage asset managers have become a competitive force in the loan packaging business, the sustained growth of trust companies shows that demand for their services has not waned,” the firm added.

Defaults

Two trust products sold by the Mainland’s largest trust company in terms of value made headlines last month as they ran into trouble, threatening to leave investors high and dry.

According to reports, Citic Trust refused to guarantee any type of payment to investors. Instead, it has taken legal steps against the borrowers behind the trust loans, saying that this was investors' last hope of getting their money back.

One of the trusts, which raised 710 million yuan ($134 million) in 2010, was tied to a real estate project in Qingdao by property developer Shieldspeare Group. Citic has used a court order to put up for sale the land used as trust collateral.

Repayments for the other product, due in mid-January, have been postponed for a further two months, giving time for Citic to negotiate with the borrower, a Sichuan-based company that produces paint coating for steel products.

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