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Investment product misses payments
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A HIGH-YIELD investment product distributed by China Construction Bank has missed four interest and principal payments, raising concern similar products may default in future.
The product created by Jilin Province Trust Co raised 972.7 million yuan (US$160.5 million) in six tranches from CCB clients, Shanghai Securities News reported yesterday. The trust then invested that money in a Shanxi-based coal mine company’s projects.
The report said the product failed to pay back investors when the fourth tranche matured last Friday.
“The account manager at CCB repeatedly told me the product was a safe investment. I didn’t think otherwise before I transferred the money into CCB’s account. I didn’t even look at the product description,” the newspaper quoted an unnamed investor as saying.
The investors were ignorant about the trust company and the coal market and most of their investment contracts were signed after they had finished money transfer, the newspaper said.
The trust product required a minimum investment of 3 million yuan and returns were based on the amount invested.
An investor placing 50 million yuan in the trust was expected to receive 6 million yuan a year, according to the product description.
Jilin Trust said in a statement in December that the debtor, Fuyu Energy Co, failed to pay back the principal and interest on the first and second tranches. Payments for the other four tranches were not guaranteed at that stage. The company would cooperate with CCB’s Shanxi branch to properly handle the situation, the statement said.
Last month, investors of a trust product distributed by the Industrial and Commercial Bank of China suspected a default as one interest payment was overdue and owners of the coal company they invested in were detained by the police. Investors got back their principal earlier this month but not the interest from the last tranche, according to media reports.
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