Ningbo Developer Owes 3.5 Billion Yuan; 2.4 Billion of it Owed to More Than 10 Banks; 30% To Be Written Off?

UPDATE: Bloomberg has English coverage: China Developer With $567 Million Debt Said to Collapse
Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay creditors that include more than 15 banks, with China Construction Bank Corp. (939) holding more than 1 billion yuan of its debt, according to the officials, who asked not to be named because they weren’t authorized to discuss the matter. The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.

The collapse of the company, based in the eastern town of Fenghua, adds to concern of strains in the nation’s real estate sector and comes less than two weeks after the first bond default by a Chinese company. Shanghai Chaori Solar Energy Science & Technology Co.’s inability to repay its debt may become China’s own “Bear Stearns moment,” prompting investors to reassess credit risks as they did after the U.S. securities firm was rescued in 2008, Bank of America Corp. said March 5.

Zhejiang Xingrun’s collapse was reported earlier today by the Chinese-language National Business Daily, which cited an unidentified government official for the news. The report blamed the failure on mismanagement and high costs of private lending, according to the newspaper.
The Bloomberg story does not include the rumor that banks will have to write off 30% of the debt.

Some illegal fundraising involved and at the end, speculation/rumor that the banks will end up having to writing off 30% of the debt.

宁波一房企资金断链负债超35亿 涉及十多家银行

Recently, the Industrial Bank [ 1.23% funding research report ] to stop the wind came real estate loans, coupled with Hangzhou have real estate prices, Wenzhou prices "cut" the news, were interpreted as a signal banks will tighten real estate loans, followed by multi- The bank issued a notice to clarify not stop lending for the housing industry.

But after all this came to be. "Stop lending storm" of risk control worries behind, appeared in Fenghua, Ningbo real samples.

"Daily Economic News" reporter learned that a former real estate sector Ningbo chiefs housing prices, recently collapsed, leaving more than 3.5 billion yuan of the huge debt, which amounted to 2.4 billion yuan bank Qiandai, involving more than a dozen banks , and disposal of the entire situation is far from a full stop to the planned time. March 13, reporters from Fenghua official informed that the enterprise funds strand breaks, has been seriously insolvent, the local task force has been set up and emergency leading group disposition related work.

Was the largest local housing prices

This room rate is Zhe Jiang Xingrun Estate Investment Co., Ltd. (hereinafter referred to as SG Sheen). Business information, Xing Yun Realty was founded in September 5, 2000, the registered capital of 400 million yuan, the legal representative of Chenming Chong. Actual control of its parent financial Xing Shen.

According to the corporate website retained information display, enterprise founded in 1987, formerly known towns Fenghua Development Limited. In 2003 in a limited liability company into a joint-stock form, and in 2005 changed its name to the industrial and commercial registration current name. The total assets of 30 million yuan, has been the national real estate development and level of intelligence. Ningbo Fenghua developed Taoyuan mansion, changting project, Sunshine Coast, Sunshine Hill District and Yong Ming are other real estate.

Shen Xing name as well as a number of financial companies. Business information to sink Choi Hing as legal representative has Zhe Jiang Xingrun Sunshine Construction Co., Ltd., Zhejiang Construction Co., the Shen.

Reporters from local sources informed Fenghua, Xiangshan Xing Shen Choi who do construction contractors birth until today to revive the entire run home-based businesses, never left the building and real estate, had almost no other areas and activities involved , is a very pure housing prices. Fenghua Xing Yun home is the largest local housing prices, Shen Xing is the president of Fenghua fiscal Real Estate Association.

Reporters also learned that Shen Choi Hing and his name companies have shortlisted Ningbo hundred companies list, and ranked considerably higher.

The predecessor of the Shen Zhejiang Zhejiang Construction Co. 江兴润 Construction Co., in 2006 to 2.501 billion yuan in revenue, ranked by Ningbo City Business Association, Entrepreneurs Association of Ningbo City, Ningbo Federation of Industrial Economics published in 2007 in Ningbo hundred companies list 33.

Public information, Xing Sheen's business but also with Zhejiang University round positive Holding Group Co., Ltd. (Zhejiang University Investment Holdings Limited) jointly established University Xinyu Group, Shen Choi Hing and other shareholders Shen Chun children also served as director of Universe Group, and the other two directors Dean of School of Management, Zhejiang University Wu Xiaobo and Xu Ying, vice president of Xinyu Group.

Provision of land or a curse

According Fenghua Finance Office briefing, Shen Xing and沈明崇fiscal alleged illegal deposits from the public because of the crime, has been transferred to Fenghua Procuratorate prosecution on March 11. Has been identified, "Xing Yun home" and related enterprises more than 3.5 billion yuan of total liabilities, including bank loans 24 billion, there is evidence of illegal deposits from the public more than 700 million yuan, involving 98 people (including organs and personnel 7) .

Fenghua City Finance Office of the Director Wu Yong told the "Daily Economic News" reporter, as well as 400 million of debt is for projects and staff salaries. Bank loans involving a total of about 15 banks, CCB is the largest amount of nearly 1.2 billion, Shanghai Pudong second, nearly 380 million yuan. WASHINGTON According to the official data to verify the reported Qiandai involving 19 banks, and Xing Sheen is currently less than 3 billion yuan of assets, insolvent.

Xing Yun home office space has been left vacant, being developed by French luxury villas "Taoyuan sites" has been shutdown for a long time. Janitor's grandfather, told reporters last year in relation to the completion of the villa's only a half of the first phase II never sold.

Wu Yong told reporters the original situation in the housing industry, high land values, the bank would like to see mortgage lending limit is also large, but now the decline in value of the land. "For example changting project, the original assessment of land 10 million yuan / mu, now with lots of places to buy Greentown, only worth 3.28 million yuan / mu."

Taoyuan mansion project also reflects a serious decline in value of the land. Xing Yun home January 11, 2010 block photographed the project location, the floor price is 7853 yuan / square meter. The Shimao Group, a subsidiary of Kunshan Shimao Butterfly Bay Development Co., December 11, 2013 photographed with lots of land, the floor price is only 3,204 yuan / square meter, a drop of 59.2%.

According to the official authorization, Xing Yun home and related enterprise funds strand breaks, poor management is the main reason was to bring down usury.

The local government is coordinating disposal

Although early in the first half of 2012, there is a company called Hangzhou Venus real estate bankruptcy, but the scale of the enterprise and bank debt and the number of banks involved, it can not be compared, and Xing Yun home. Xing Sheen's decline, highlighting the risk of financing housing prices sense.

Although previous rumors banks stopped lending real estate, banks have all been finally clarified. Zhejiang branch of a state-owned bank governor also told reporters that the real estate lending policies have not changed, yet monitored risk.

But last year, the China Banking Regulatory Commission on the issue of the "2013 points supervision of large banks", requiring special attention to large banks and industries closely related to changes in the economic cycle, overcapacity risk industries and key enterprises in five exposure, which it referred to the real estate. Experts estimate that housing-related loans, business clusters and industries with excess capacity in total loans amounted to as much as three or four ten trillion yuan, a high concentration, high-impact surface.

The February 28 release on the website of China Banking Regulatory Commission, " Bank of China [ 0.40% funding research report ] industry to run the report "shows that the CBRC will actively prevent the risk of real estate loans, real estate loans to strengthen risk management. And strictly control the real estate loan risk, attention focused on business, continue to strengthen the "list" system management, to prevent individual enterprise funds strand breaks possible risk of infection.

"Daily Economic News" reporter that day, just hit deputy mayor in charge of convening Fenghua City Finance Office and one of six banks to open a coordination meeting to discuss the disposition of assets Xing Yun home. Wu Yong told reporters the government is to find ways to fight the bank's NPL ratio down, "because of this problem soon exposed."

According to sources, the government in dealing with the bank loan interest home run this asset, 70% of the tray, and the rest written off by the banks to reduce the area of ​​the defect rate. However, this information has not been confirmed in Fenghua City Finance Office, Wu Yong said the specific disposal has not yet finally agreed.

Xing Yun-related debt problems for home buyers, CCB aspect is declined a reporter's interview, which means that everything in the disposal by the local government, the inconvenience to undergo a separate interview

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