Interface News Reporter | Zou Wenrong
Interface News Editor |
2023 is destined to be the most transformative year in the development of the trust industry.
At a time when the industry is facing the challenge of transforming its development mode, optimizing its business structure, and transforming its growth momentum, the "Three Classifications of Trust Business" and a series of supporting documents were officially released, which clarified the direction for the transformation of the entire trust industry.
Under the guidance of regulators and the efforts of all parties, a number of high-risk trust institutions also made important progress in risk mitigation during the year, and the industry developed increasingly steadily.
The scale of trust assets stopped falling and stabilized, with positive year-on-year growth for five consecutive quarters
Since the beginning of this year, the scale of trust assets has continued to grow steadily since 2022.
According to the China Trust Association, as of the end of the second quarter of 2023, the balance of trust assets was 21.69 trillion yuan, an increase of 469.9 billion yuan from the end of March, a month-on-month increase of 2.21%, and an increase of 576.9 billion yuan from the same period last year, a year-on-year increase of 2.73%.
Affected by the regulatory environment, the year-on-year growth rate of trust assets began to turn negative in September 2018 and continued until the end of March 2022, and the scale of trust assets also decreased from a peak of 26.25 trillion yuan at the end of December 2017 to 20.16 trillion yuan at the end of March 2022, a decrease of 23.18%.
However, since the second quarter of 2022, the scale of trust assets has stabilized and rebounded, according to the data of the China Trust Association, as of the end of June this year, it has achieved positive year-on-year growth for five consecutive quarters, and the scale change has tended to be stable.
The three classifications of trust business and the first supporting guidelines have been implemented
After preparations in 2022, the Notice on Standardizing the Classification of Trust Business of Trust Companies, i.e., the "New Regulations on the Three Classifications of Trust Industry", was issued in March 2023 and will be implemented from June 1.
Compared with the 2022 Consultation Draft, the biggest adjustment in the official version advances the position of the asset service trust business to the first major classification. Trust companies shall divide the trust business into three categories: asset service trusts, asset management trusts, and charitable trusts, with a total of 25 business varieties based on the purpose of the trust, the method of establishment of the trust, and the content of the management of the trust property.
One month after the implementation of the new three-category regulations, the regulatory authorities issued the full name of "Guidance on Industry Centralized Reflection after the Implementation of the Notice on Regulating the Classification of Trust Business of Trust Companies (1)" to local banking and insurance regulatory departments. The first guidance explained in detail in the form of questions and answers a total of 20 relevant issues at the practical level after the implementation of the Notice on Regulating the Classification of Trust Business of Trust Companies.
Among them, for the asset management business, the document clarifies for the first time that the standard business of the trust company can carry out bond repurchase and derivatives business operations. However, at the same time, it is also mentioned that trust companies are not allowed to carry out the business of issuing trust products to meet the specific financing needs of a single financier in the form of asset management trust business in the role of private equity investment bank.
The document indicates that trust companies should prudently carry out non-standardized creditor's rights assets and equity investment business of unlisted enterprises. In principle, asset management trusts should diversify risks through portfolio investment, and the regulatory authorities will improve the relevant supporting systems and clarify the relevant requirements for portfolio investment.
The new regulations for the non-local departments of trust companies have been released
After a year of precipitation, the "Notice on Regulating Relevant Matters of Non-local Departments of Trust Companies" will also be officially released in 2023. The final version has a total of eight provisions, which clarify the establishment of trust companies in different places, the opening of remote management headquarters, and the responsibilities of regulatory departments, and further improve the "list-style" supervision mechanism.
In response to the issue of "dual headquarters", from the perspective of financial risk prevention, the supervision clarifies that the local banking and insurance regulatory bureau shall carry out regulatory assessment, and if it is really necessary to retain, guide the trust company to take the initiative to report to the relevant local party committee and government, and after clarifying the opinions, in principle, a remote management headquarters can be retained.
At the same time, Article 8 of the Circular stipulates that, in principle, trust companies may set up non-local departments in six cities across the country according to their business development needs, medium and long-term development plans, internal control levels and risk management capabilities. The number of non-local departments set up in the same city to work at the same address shall not exceed 5.
Trust ratings have been updated and differentiated supervision has been upgraded
On November 16, the State Administration of Financial Supervision and Administration officially issued the Interim Measures for the Supervision and Classification of Trust Companies (hereinafter referred to as the "Measures").
The Measures comprehensively adjust the rating framework and element settings. The rating framework is optimized into five modules: corporate governance, capital requirements, risk management, behaviour management and business transformation, with weights of 20%, 20%, 20%, 30% and 10% respectively, and a number of adjustment factors for rating upgrades and downgrades are set.
According to the Measures, the rating results are divided into six levels, with the higher the grade, the greater the risk of the institution, and the more it needs regulatory attention. The industry believes that trust companies implement differentiated supervision, and the results of regulatory rating not only reflect the operation and risk status of trust companies, but also directly affect the business scope of trust companies, restrictions on business venues, and payment of institutional supervision fees and business supervision fees.
In addition, the Measures use indicators such as the scale of trust business, trust investors and the balance of interbank liabilities as evaluation factors, and assign different weights to select trust companies with high systemic impact.
11 trust companies were approved to increase their capital, with a total capital increase of nearly 20 billion yuan
After experiencing a large-scale capital increase in the industry from 2018 to 2020, the capital increase of the trust industry has slowed down this year, and most of the capital increase entities are small and medium-sized trust companies.
Up to now, Yunnan Trust (1 billion yuan), Jianyuan Trust (4.375 billion yuan), Shaanxi Guotou Trust (1.15 billion yuan), Yuecai Trust (2.4 billion yuan), Jilin Trust (1.553 billion yuan), Huachen Trust (74.21 million yuan), Western Trust (2 billion yuan), Chang'an Trust (1.994 billion yuan), Zhongyuan Trust (681 million yuan), Northern Trust (1.001 billion yuan), There are 11 Tibet trusts (2.1 billion yuan), with a total capital increase of about 18.328 billion yuan.
From the perspective of the form of capital increase, Shaanxi Guotou Trust, Jianyuan Trust and Zhongyuan Trust are all in the form of "fixed increase", Yunnan Trust, Yuecai Trust and Western Trust are all capital increases in the form of undistributed profits, and Chang'an Trust, Huachen Trust, Jilin Trust and Tibet Trust have successfully introduced new state-owned shareholders.
New progress has been made in risk mitigation for high-risk trust institutions
In February, the equity restructuring of Huarong Trust was successfully completed. The new shareholder, Sinosure Fund, and the original shareholder, China Huarong (now known as CITIC Financial Assets), completed the handover in Beijing. Credit Insurance Fund holds 76.790% of Huarong Trust and is the largest shareholder of the latter, while China Huarong officially withdrew from the list of shareholders of Huarong Trust.
In May, Xinhua Trust officially announced its bankruptcy, and its first trust company in mainland China to go bankrupt since the promulgation of the Trust Law in 2001, and the number of licensed trust institutions in the industry will be reduced to 67.
In the same month, Anxin Trust started the discount payment of natural persons, and a number of natural person investors who signed the transfer of beneficiary rights said that they had received the first transfer money. Later, in November, "ST Jianyuan" officially took off its hat and changed it to "Jianyuan Trust".
In terms of Sichuan Trust, the company issued a work progress report in July, saying that the company's risk disposal work has made key progress. The relevant intermediaries have completed special due diligence and assessment, and updated the asset base. The risk disposal plan has been formed and submitted in accordance with the procedures. In the next step, the regulatory working group will further support powerful state-owned enterprises to participate in risk disposal related work in accordance with the law.
In August, a large area of overdue payment occurred in Zhongrong Trust products, and the company officially responded in September that it had signed the "Entrusted Management Service Agreement" with CCB Trust and CITIC Trust, and hired the above two companies to provide professional services for the operation and management of Zhongrong Trust. The entrustment period is from September 15, 2023 to September 14, 2024.
On October 21, at the sixth meeting of the Standing Committee of the 14th National People's Congress, Pan Gongsheng, governor of the central bank, mentioned that the disposal of high-risk insurance trust institutions such as Evergrande Life Insurance and Zhongrong Trust will be accelerated.
Changes in the core managers of 23 trust companies
Under the pressure of industry transformation, "high frequency" is still the key word for the high-level personnel adjustment of trust companies in 2023.
As of press time, the State Administration of Financial Supervision and Administration (including the former China Banking and Insurance Regulatory Commission) has issued a total of 25 appointment documents for the chairman and general manager (including the president, the same below), involving 23 trust companies.
In 2022, there were 20 trust companies involved in the approval of the change of chairman and general manager, compared with 23 in 2021.
Judging from this year's situation alone, there are 12 newly approved chairmen and 13 general managers, among them, Kunlun Trust and Huaneng Guicheng Trust are involved in the change of chairman and president at the same time.
It is difficult for small and medium-sized shareholders to transfer trust equity
In order to accelerate the return to the main business, the minority shareholders of the trust company are still waiting for the transfer of the trust equity they hold.
Taking Western Trust as an example, since the beginning of this year, five small shareholders holding less than 2% of the shares, including China Railway Baoqiao Group, Xi'an Aircraft Industry (Group), Shaanxi Aircraft Industry, AECC Xi'an Aero Engine and Baoji Petroleum Steel Pipe, have tried to sell their shares in Western Trust.
The dilemma of minority shareholders of Western Trust has also been staged in the equity auctions of several other trust companies waiting to be sold.
Up to now, the 3.3921% equity of China Chengxin Trust held by China Coal Group is still listed on the Beijing property rights trading platform at a low price of 780 million yuan, but the end date of the listing has been postponed several times from the original September 12, 2023.
In April this year, Pangang Group Chengdu Iron and Steel Co., Ltd. listed and transferred 0.826% of the equity of China Railway Trust, in May, CNOOC Investment Holdings also listed 3.89% of the equity of Northern Trust, and in September, Qinghai SDIC listed 9.75% of the equity of Minmetals Trust.
In contrast, the transfer of Weiyi Investment, the third largest shareholder of Beijing Trust, can be described as smooth, and the receiver, China Chengxin Group, intends to acquire 11.48% of the equity of Beijing Trust held by Weiyi Investment for US$121 million. However, for the valuation of the transaction, Yuxiao Rare Earth (400122. NQ) believes that it is much lower than the fair value of the company's annual report audit.