Largest Privately Run Credit Guarantee Firm in Sichuan Goes Bust

The executives of Sichuan's Huitong credit guarantee have "lost contact" and the status of ¥5 billion worth of loans are up in the air. The offices of the executives were sealed by police on July 9. The firm is the largest privately run credit guarantee firm in Sichuan. The local government is temporarily taking over operations and has instructed the banks to continue working with the firm.

Huitong offered investors a 2% monthly return. There was no investment contract, only evidence from the firm that it received funds. Investors could take their money out at anytime, but two days advance notice was required. Investors say they have no idea where the money went, only that Huitong used it for credit guarantees. Another firm called Rongyuan Investment Management also accepted funds. They claimed to be a Huitong subsidiary, but receipts for funds invested didn't have the company seal.

Huitong has worked with more than 20 banks, several trust companies and even public housing funds. The largest amount of the outstanding ¥5 billion in credit is bank loans, worth about ¥4.5 billion. The rest is with other firms, as well as some loans made directly by the credit guarantee firm. If some loans backed by Huitong are to other credit guarantee companies, legal action by the banks could result in yet more falling dominoes.

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Credit Guarantee Firms Go Down Like Dominoes

四川汇通担保多名高管失联 金融机构50亿贷款悬空
and private financing guarantee companies a credit crisis domino down again, this time down the Sichuan province's largest private security company, one - Remittance Credit Financing Guarantee Co., Ltd. (hereinafter referred to as "Land of Guarantee") .

This guarantees a registered capital of 900 million yuan of the company, in July 8 executives appeared in the case of collective lost contact. 21st Century Business Herald reporter survey found that the use of its shareholders Huitong guarantee private investment firm with more than about 2 minutes of monthly interest from private financing.

July 9, A Block, Century Center in Chengdu, financial institutions gathered Air, Land of the guarantee of thousands of square meters, 11th floor office, none of the staff of the company, but packed with investors and guarantee their handheld Huitong Huitong related financial guarantee company receiving the credentials, anxiously waiting for the Land of security management message.

The executives in the company's office door, have been labeled the Wuhou District Public Security Bureau's seal, date July 9.

July 8, Land of the security company, including chairman Yang Zhigang, Xie Jie, president, executive vice president Liu Yuying, including executives collectively lost contact, the reporter called the phone showed these people have been shut down. But the news should give thanks to Jay has returned to Chengdu.

News from the official, provincial, municipal finance office have set up an investigation group, the investigation is ongoing, have not mastered these executives fled the reason for raising the amount of civil nor statistics.

Sources close to the investigation team, told the 21st Century Business Herald reporter: "The local government will temporarily take over the company, helping to re-operate Huitong guarantee, and require banks to not interrupt business cooperation with the Land of guarantees."

"There is no financial contract, Land guarantees starting in 2011 is to do so, there is only one receiving the credentials, the investor pays a monthly income of 2% after the investment, if withdrawals, two days in advance reservations can be." An investment told the 21st Century Business Herald reporter.

Investors also said they do not know what the money voted for the project, just know that all of the principal and income guarantees provided by the Land of guarantee.

An investor on March 19, 2014 in Chengdu, financial investments 350,000 edge asset management company, on its official seal Huitong even receiving a certificate are not guaranteed. "They will be stamped before, but later said the two companies are no longer just sealed a relationship, but when they explicitly say that they are selling affiliate Cathay guarantees." An edge in financial asset management companies to invest in those years said.

21st Century Business Herald reporter awarded two marked as confidential Huitong guarantee business marketing trends, a date is October 2013, another was in February 2014. After comparing the two data found Huitong guarantees secured with doing business in Guiyang banks, rural credit cooperatives in Sichuan, China Merchants Bank, more than 20 banks, and Fortune Trust, Jingu Trust and other trusts, including, in addition to including housing fund management center.

Business dynamic display, the end of February 2014, the company guarantees the balance of 4.578 billion bank, trust in the security balance 245 million, 65 million small loan companies, straight off 196 million loan guarantee, warranty 193 million project.

Where the highest proportion of banks and financial institutions in Chengdu, Sichuan rural credit cooperatives, guarantee balance was 742 million and 539 million, accounting for 15.19% and 11.03%. Guiyang, China Merchants Bank and Bank followed, as of the end of February and guarantees amounted to 421 million 402 million.

As of press time before reporters, Sichuan rural credit cooperatives did not respond to interview requests; Chengdu banks, said: "After the line verification, guaranteed by the Land of normal business operations, but progress in Chengdu, banks will continue to focus on the event."

Including the Agricultural Bank of China, Construction Bank, Bank of China, Agricultural Development Bank and other large state-owned banks, Societe Generale, China and other shares of the line, as well as Harbin Bank, Guiyang, Bank of Shanghai, Chongqing, banks, contractors Bank, Bank of Dalian, Nanchong City Commercial Bank, Bank of Deyang City firms are involved, the balance in Bulgaria also many hundreds of millions.

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