China’s shadow banking system under spotlight as Sichuan Trust misses payments amid economic slowdown
- Sichuan Trust last week apologised to investors for missing payments on its financial products due in part to the coronavirus outbreak and global economic downturn
- The firms troubles indicate growing risks in the trust industry, which is often linked to China’s shadow banking system
The cash-strapped trust company backed by the Sichuan provincial government last week apologised to investors for missing payments on its financial products, saying it was exploring new ways to generate cash.
“Affected by the global economic downturn, the new coronavirus outbreak, and the suspension of the issuance of trust of trust products, some companies are unable to return funds on time. As a result payments have not been distributed on time. Sichuan Trust sincerely apologises to you,” the company said in a statement on its website.
The firm said it was looking to dispose of some of its assets, including shares and property, and introduce “strategic investors” along with other ways to “enhance the company’s capital strength and supplement liquidity”.
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“The company will go all out and strive to recover the funds by disposing the underlying assets within one year and allocate them in a timely manner in accordance with the progress of recovering our funds,” Sichuan Trust said, without disclosing the amount owed to investors.