Chinese trust firm clients say wealth product payout delayed

Two clients of Chinese trust company Zhongrong International Trust Co. said the firm delayed payment of maturing wealth products amid reports of liquidity concerns at a major shareholder, the latest sign of turmoil in China's financial sector. Nacity Property Service Co. and KBC Corp. first announced news of the delayed payments in statements Friday evening.

KBC, a carbon products manufacturer, said in a statement with the Shanghai Stock Exchange that the delayed payments were tied to 60 million yuan ($8.3 million) invested with Zhongrong and wouldn't affect company operations. Chinese asset management firm Zhongzhi Enterprise Group Co. a financial giant in China whose business cuts across trusts companies, private equity and wealth management has an ownership stake in Zhongrong.

Late last week, there was speculation that the delayed payments were related to a liquidity crisis at Zhongzhi, which has about a trillion yuan in assets under management, according to Caixin. Representatives for Zhongrong couldn't be reached for comment Sunday outside of business hours.


The news of Zhongrong's delayed payout comes as investors have been on edge recently over concerns of the health of China's economy and financial markets. One of the nation's largest developers, Country Garden Holdings Co., unsettled markets last week amid fears of a default as it reported steep losses in the first half of the year. The trust industry has also been pressured by the crisis in China's property sector in recent years, with companies defaulting on investment products linked to property developers in the past. Bloomberg