ADVERTISEMENT
NewsMadura
  • Latest Stories
  • Business
  • World
  • Politics
  • Science & Space
  • Entertainment
  • Technology
  • Health
  • Sports
  • Auto
  • Travel
  • Lifestyle
No Result
View All Result
  • Latest Stories
  • Business
  • World
  • Politics
  • Science & Space
  • Entertainment
  • Technology
  • Health
  • Sports
  • Auto
  • Travel
  • Lifestyle
No Result
View All Result
NewsMadura
No Result
View All Result
Home News World Asia

China’s biggest ‘bad bank’ gets rescue

Jatin Batra by Jatin Batra
August 19, 2021
in Asia
0
China's biggest 'bad bank' gets rescue
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter


China has promised to teach its most indebted companies a lesson. Just not yet.

Huarong Asset Management, the financial conglomerate that was once a paragon of China’s corporate surplus, said Wednesday evening it would receive financial backing from a group of state-backed companies after months of silence over its future. The company also said it had made a loss of $16 billion in 2020.

Citic Group and China Cinda Asset Management were among the five state-owned companies that will make a strategic investment, Huarong said without giving more details about how much money would be invested or when the deal would close.

Huarong also said it had no plans to restructure its debt, but left unanswered the question of whether foreign and Chinese bondholders should accept significant losses on their investments.

Investors saw the news as a strong indication that the Chinese government was not yet ready to see the bankruptcy of a company so closely linked to its financial system. For months, investors waited for news about Huarong and its financial future after the company postponed its full-year results in March and suspended trading in its shares in April.

“It’s hugely positive,” said Michel Löwy, chief executive of SC Lowy, an investment firm that has a small exposure to Huarong’s US dollar bonds. “It’s certainly a partial bailout, because I don’t believe that fully independent investors would sign up for a capital increase without guarantees or a tap on the shoulder,” Mr Löwy said of the group of state-backed companies listed in Huarong’s statement. is called.

Beijing looked the other way for years as companies like Huarong borrowed a lot of money to expand. The companies grew into huge conglomerates built largely on cheap government bank loans and borrowed money from foreign and domestic investors who believed they could count on the Chinese government to bail them out when it came down to it.

In recent years, however, officials have indicated a willingness to let some of these companies fail as they try to contain the mounting debt that threatens the Chinese economy.

Even as Beijing cracked down on risky binge lending, Huarong tested the limits of China’s commitment to reform. Known as a “bad bank,” Huarong was founded in the late 1990s to take out the ugliest loans from state-owned banks before turning to global markets to raise money when China opened up. It later expanded into a sprawling empire lending to high-risk companies, taking advantage of access to cheap loans from state-owned banks.

Over the years, Huarong became more and more intertwined with China’s financial system, leading some experts to say it was “too big to fail” and put regulators in a difficult position. Under its former chairman, Lai Xiaomin, it was involved in suspicious deals that regulators said led to corruption so widespread that it may be impossible to assess the full extent of the losses.

Mr. Lai confessed to using his position to take $277 million in bribes and was sentenced to death and executed in January for corruption and abuse of power.

In his statement on Wednesday night, Huarong partially blamed the “aggressive operation and disorderly expansion” of the company under Mr. Lai for the $16 billion loss.

Another cash injection will give Huarong more time to sell parts of its massive financial empire, analysts noted, though it was unclear whether the investment would be enough to reverse the company’s skyrocketing losses.

Tags: badbankbiggestChinasNewsMadurarescue
Previous Post

Multiple dead when Taliban opened fire on protesters: 10 facts

Next Post

California wildfires spark a wave of evacuations.

Jatin Batra

Jatin Batra

Editor

Next Post
California wildfires spark a wave of evacuations.

California wildfires spark a wave of evacuations.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Stay Connected

    • Trending
    • Comments
    • Latest
    How Fermented Foods Can Change Your Microbiome and Improve Your Health

    How Fermented Foods Can Change Your Microbiome and Improve Your Health

    August 13, 2021
    Buy tool boxes

    Buy tool boxes

    August 23, 2021
    There are no flights departing or landing at Kabul airport, the Pentagon says.

    There are no flights departing or landing at Kabul airport, the Pentagon says.

    August 16, 2021
    NDTV News

    Photos: Taliban’s Kabul Takeover Caps Afghanistan Blitz

    August 16, 2021
    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    0
    NDTV News

    Krsnaa Diagnostics IPO: Here’s How To Check Assignment Status

    0
    NDTV News

    Syrian President Bashar al-Assad issues decree to form new government: Twitter presidency

    0
    Asus ROG Phone 5s Specifications Tipped; May Come With Snapdragon 888 Plus SoC, Up to 18GB RAM

    Asus ROG Phone 5s Specifications tipped; May come with Snapdragon 888 Plus

    0
    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    July 25, 2023
    NDTV News

    Ensure violence ends in Manipur: Human rights panel tells state government

    July 25, 2023
    'Operation Cookie Monster': The Dutch arrest their most wanted suspect in cyber case - News18

    ‘Operation Cookie Monster’: The Dutch arrest their most wanted suspect in cyber case – News18

    July 25, 2023
    NDTV News

    SpiceJet plane catches fire at Delhi airport during maintenance

    July 25, 2023

    Recent News

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    July 25, 2023
    NDTV News

    Ensure violence ends in Manipur: Human rights panel tells state government

    July 25, 2023
    'Operation Cookie Monster': The Dutch arrest their most wanted suspect in cyber case - News18

    ‘Operation Cookie Monster’: The Dutch arrest their most wanted suspect in cyber case – News18

    July 25, 2023
    NDTV News

    SpiceJet plane catches fire at Delhi airport during maintenance

    July 25, 2023

    International News,Latest Stories,Breaking News-NewsMadura

    Follow Us

    Browse by Category

    • Africa
    • Americas
    • Asia
    • Auto
    • Baseball
    • Basketball
    • Business
    • Cricket
    • Entertainment
    • Europe
    • Gadget
    • Health
    • India
    • Latest Stories
    • Lifestyle
    • Middle East
    • Politics
    • Science & Space
    • Soccer
    • Sports
    • Technology
    • Tennis
    • Travel
    • U.S.
    • US Politics
    • World

    Recent News

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    DeSantis is cutting campaign staff by more than a third, aiming to keep costs in check

    July 25, 2023
    NDTV News

    Ensure violence ends in Manipur: Human rights panel tells state government

    July 25, 2023
    • About
    • Advertise
    • Privacy & Policy
    • Contact

    ©Copyright 2021 NewsMadura - Stay ahead with NewsMadura

    No Result
    View All Result
    • Latest Stories
    • Business
    • World
    • Politics
    • Science & Space
    • Entertainment
    • Technology
    • Health
    • Sports
    • Auto
    • Travel
    • Lifestyle

    ©Copyright 2021 NewsMadura - Stay ahead with NewsMadura