Related News
Trust firms’ fast gain not sustainable
Print Edition
The breakneck pace of growth in China’s 10 trillion yuan (US$1.64 trillion) investment trust industry cannot be sustained and earnings risk drying up as the government steps up financial reforms that will change sources of revenue, research shows.
Close to 90 percent of revenues in the industry are at risk in the long run with about 40 percent of earnings forecast to disappear completely in five years, according to a study by consultant McKinsey & Co and Ping An Trust.
The industry, the second biggest in the financial arena in China after banks, earns most of its income from financing riskier borrowers and helping banks and other institutions buy assets that they cannot invest in due to regulations.
But the income will vanish as China liberalizes its financial industry to let investors buy into a range of assets, and give riskier borrowers more access to credit, the research said.
“Just how big a role will be left for trust companies and at what margins is unclear,” the report said.
To survive, China’s trust companies will have to remake themselves into companies similar to Goldman Sachs, specializing in investment banking, private wealth management and alternative asset management, said Stephan Binder, a director at McKinsey.
A part of China’s ballooning shadow banks, investment trusts have surged on the back of a class of borrowers who can’t borrow from banks due to rules or their risk profiles.
Trusts have filled the void by linking borrowers to investors and savers seeking higher returns for their excess cash.
Ping An Trust is a unit of the world’s No. 2 insurer by market value, Ping An Insurance Group Co.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
