The life and death line of 6 trillion financing business: the trust shall not be added until the pressure drop is completed

 The life and death line of 6 trillion financing business: the trust shall not be added until the pressure drop is completed

The 21st century economic report reporter has confirmed from many aspects that some trust companies have recently received supervision window guidance, while others have not.

On November 27, the general manager of a head trust company disclosed to the 21st century economic news reporter that the purpose of the supervision window guidance is to hope that the trust company can complete the pressure drop indicators proposed at the beginning of the year. Some companies do not fall but rise instead, which is definitely not possible; some companies do not have good pressure drop effect, so we should remind them; some companies have completed the work, and they will be fine. If the pressure drop does not meet the requirements, the regulation will certainly take some measures.

At the end of 2019, each trust company received about 20% of the pressure drop from its own financing window.

The pressure drop ratio of 20% should be the target value of the whole industry. An executive of a trust company with the background of a central enterprise speculated to the reporter of the 21st century economic report.

What is the concept of this ratio?

There is no public data on the scale of active management financing trust. According to the statistics of the trust industry association, by the end of 2019, the balance of financing business of trust companies was 5.83 trillion yuan, an increase of 1.48 trillion yuan compared with the same period of last year, accounting for 26.99% of the total trust scale, with a year-on-year increase of 7.84%. At that time, it was also the first time in the past three years that the proportion of transaction management trusts dropped below 50%.

Roughly speaking, the scale of active management financing trust will drop by about 1 trillion yuan by pressing the reduction ratio of 20%.

In fact, in the first half of this year, the overall financing business of trust companies is still on the rise. By the end of the second quarter of 2020, the balance of financing business has reached 6.45 trillion yuan.

In July this year, Everbright trust was guided by Gansu banking and insurance regulatory bureau to reduce financing business and guide it to optimize its business structure.

The data of financing business in the second half of the year has not been released by the trust industry association. According to the data of collective trust established from January to October this year obtained by 21st century economic report reporter from the Research Institute of usufructuary financial trust, the scale of newly established collective trust financing business began to decline significantly after June. In October 2020, the scale of establishment was only 54.423 billion yuan, which was 198.71% less than that in June.

On November 25, the market rumors that about 40 trust companies (68 in total) in China immediately suspended financing business, and the recovery time is uncertain.

The reporter of 21st century economic report asked many trust companies around the world to verify. Most of them said that they did not receive the above window guidance, and some trust companies did not give positive response.

A relevant person of a trust company who did not respond positively said that the accurate statement of the window guidance should be no additional pressure drop is allowed if the pressure drop is not completed.

Some industry insiders told reporters of the 21st century economic report that some companies failed to meet the pressure drop targets, and the purpose of the suspension was to let them implement the previous regulatory requirements and ensure that the pressure drop was in place before the end of the year.

At the end of 2019, at that time, the industry was putting pressure on the channel business and controlling the balance of real estate trust business.

At the end of 2019, Huang Hong, vice chairman of the China Banking and Insurance Regulatory Commission, pointed out at the annual meeting of China Trust industry that individual trust companies have carried out a large number of high-risk non-standard financing business by concealing the true investment direction of funds through nesting layer by layer. Although the companies and executives have obtained short-term benefits, they have damaged the investors right to know and interests.

In March 2020, the local CBRC conveyed the trust supervision requirements of 2020 to the trust companies in their jurisdiction, including: continue to compress trust financing business with shadow banking characteristics, and formulate financing trust compression plan. According to the securities times, according to the regulatory authorities plan at the beginning of the year, the industry will drop 1 trillion yuan of financing trust business with the characteristics of shadow banking by 2020.

The draft of new rules for fund trust brings a heavy blow to the non-standard business of trust companies once again. In May this year, the Interim Measures for fund trust management of trust companies (Draft for comments) introduced the non-standard proportion limit for the first time, in which the collective fund trust plan limits the proportion of non-standard business scale of a single entity to net assets by 30%. According to the industry calculation, with the average net assets of the industry at the end of 2019 as the base, and under the constraint of 30% ratio, the scale of loans or other non-standard bond business between trust companies and single entities cannot exceed 3 billion yuan.

On June 24, the CBRC issued the key points of looking back to rectify the disorder in the banking institutions market in 2020, which listed the financing trust business separately, and asked to focus on the phenomenon of failing to formulate and effectively implement the financing trust business compression plan according to the regulatory requirements in this business.

At the end of June, the CBRC issued a notice on the work related to the disposal of risk assets of trust companies, focusing on requiring trust companies to increase the disposal and resolution of on balance sheet and off balance sheet risk assets. Secondly, it put forward clear requirements for reducing trust channel business, and required trust companies to reduce seriously illegal and illegal financing trust businesses.

The indicators issued by the supervision include channels, financing and non-performing assets, which are the overall requirements for the healthy development of the industry. The regulatory requirements are very clear, so that we can operate in accordance with the law. The general manager of the above trust company told the reporter of the 21st century economic report.

During the year, several trust companies were reported

Why does financing business get here?

In fact, the scale of financing trust business does not account for a high proportion in the overall entrusted scale, which is equivalent to the scale of investment business. The industry generally considers these two types of business as active management business, but there has been no clear definition.

According to the classification of Trust Industry Association, the financing business of trust covers multiple dimensions. Among the traditional businesses, some are invested in industrial and commercial enterprises, financial institutions, infrastructure and real estate; in innovation business, asset securitization and consumer finance are also included in the financing business.

At the end of the fourth quarter of 2017, the scale of financing business was 4.43 trillion yuan, and the scale of transaction management business was 15.65 trillion yuan. Since then, the scale of transaction management business has been reduced, and the scale and proportion of financing trust business began to increase significantly.

At the beginning of this year, Jin Yu, general manager of the strategic research department of Zhongcheng trust, pointed out that the reasons for the increase in the scale and proportion of financing trust in the past two years mainly include macro-economy, policy regulation, industry supervision and the inertia of trust companies in pursuit of short-term performance.

A number of insiders have analyzed to the 21st century economic report that the reason why financing business has attracted regulatory attention and suffered pressure drop in 2020 is that trust channels are very flexible, and they are closely connected with banks and other financial institutions. Controlling the scale of financing trust may be conducive to controlling potential financial risks such as real estate and government debt. Moreover, in recent years, the risk events exposed by Anxin trust, Sichuan trust and Huaxin trust all come from this business, and the risk exposure is relatively large, which has attracted the attention of the regulatory authorities.

In June 2020, the CBRC defined the financing business. The broad sense of financing trust includes both channel financing trust business and financing trust business actively managed by trust companies.

The regulation also made it clear that the financing businesses that need to be focused on this time mainly include two aspects: one is that all kinds of financial institutions use trust channels to carry out regulatory arbitrage and evade policy restrictions; the other is that trust companies deviate from the trustees position and regard themselves as credit intermediary, and the risk is actually borne by trust companies, which are carried out in violation of laws and regulations. To reduce the illegal financing trust business is to gradually reduce the overall risk of the trust industry.

The CBRC said that the transformation and development of trust companies is a gradual process, and it will be a continuous work to reduce the illegal financing trust business. Therefore, the regulatory policy will not stop the trust companies from carrying out financing trust business, but gradually reduce the scale of illegal financing business and promote its optimization of business structure until the trust company can rely on the original business to support its operation and development.

At the same time, the CBRC also pointed out that in the future, the financing trust business will be carried out by trust companies with standardized management, strong risk control ability and strong capital strength, so as to ensure that the entrusted duties are in place and the business risks are controllable, so as to truly realize the seller is responsible and the buyer is responsible.

(author: Zhu yingzi, editor: Ma Chunyuan)