BEIJING, June 19 (Xinhua) -- Zhongrong International Trust Co., Ltd. (ZRT) refuted Thursday market hearsay that the company had been required to suspend its financing business, reported sector portal Securities Daily Friday.
ZRT told the newspaper it did not receive any regulatory requirements for suspending financing business recently, saying that the company operates currently its businesses in an orderly manner including adjusting business structure, investment size and strategies to focus back on trust business.
On Thursday, market hearsay popped up that trust products for fundraising failing to be approved by Chinese regulator by midday of June 18 would not be allowed to continue, leaving at once many trust firms at the core of the market upheaval.
However, industry players from many trust companies in Beijing and Shanghai of China rebutted the hearsay, noting that they had not received any regulatory requirements.
Generally, the report held the alleged suspension of financing business of trust companies was not an industry-wide phenomenon and might refer only to halt of business of the type for some individual trust firms.
As industry insiders believed, financing business of trust firms usually accounts for a large proportion of their business and funds under their management. Under such circumstances, Chinese regulators are unlikely to impose one unified suspension requirement for financing business of all trust firms as it may result in sector liquidity crunch or even systemic risks.
Statistics with China Trustee Association (CTA) showed that outstanding trust products for fundraising valued 6.18 trillion yuan by the end of the first quarter, accounting for 28.97 percent of all trust products.
Nevertheless, reducing financing business of trust firms is a highly likely trend. Jian Yongjun, special researcher with CTA reckoned traditional financing business of trust firms could not support their high-quality development at present given the declining interest rates, enlarging direct financing and higher regulatory requirements.
In other words, trust companies should change their modes for developing financing business and exploit their advantages in client management, trust loans, entrusted services, investment and wealth management to provide integrated financial services for clients, Jian added. (Edited by Duan Jing with Xinhua Silk Road, email@example.com)