Minsheng Back in the News, Beijing West Train Station Branch

In 2013, the Beijing West train station branch of Minsheng bank sold a product without an official seal. Three years on there's no settlement, but Minsheng claims they are not responsible because investors purchased despite no official Minsheng seal being on the document.

This doesn't look like a major story, but it was a top headline in the iFeng finance section. It speaks more to investor mood at the moment, and the attention on the banks and WMPs.
iFeng: 民生银行：通过法律途径解决西客站支行投资人诉求

According to the relevant information disclosed by investors before, investors and China Sun Yat Investment Fund Management Company signed a "partnership agreement", the custody of non-people's livelihood bank, "partnership agreement" also did not cover the Minsheng Bank official seal. "From the above materials, the purchase of the product is the investor's own behavior, do not see Minsheng Bank has a direct responsibility." A lawyer told reporters that as for the bank staff in the sale of the existence of problems, Organizational findings.

In this regard, Minsheng Bank Beijing Branch, said the West Railway Station sub-branch events, investors buy products non-livelihood bank financial products, the bank found that there is no funds to enter the Minsheng Bank account.

The branch further said that the West Railway Station sub-branch investors and Hangtian branch case investors are different, the two events of different nature, can not be generalized, but the bank in a highly responsible attitude towards each investor, for investors To the practical problems, according to the law to put forward a solution.

It is reported that Minsheng Bank has been in accordance with regulatory requirements to conduct investigation, the relevant responsible person for the initial treatment. The bank said that adhere to the legal channels to resolve investor demands, hope and investors together, with the judicial power to fully identify the facts, on the basis of separation of responsibilities, according to the law to solve the demands of investors.

Minsheng Fake WMP Invested in Real Estate, Jewelry, Relics

The Minsheng fake WMP won't exceed the 3 billion yuan headline figure and Minsheng currently says the amount is 1.65 billion yuan.
iFeng: 民生银行：假理财涉案16.5亿 部分资金投向房产文物

In today's Minsheng Bank 2017 first quarter investor exchange meeting, Minsheng Bank Vice President Shi Jie introduced the bank Beijing Bay Bridge branch case related situation. According to its disclosure, as of now, by the Minsheng Bank Working Group by the client with the registration and verification, involving the amount of about 1.65 billion yuan , the initial estimate of the amount involved will not exceed the number reported by the media , involving about 150 customers, in addition to Zhang Ying, Another individual branch staff is receiving a public security investigation. Prior to the media coverage of the amount involved to 3 billion.

According to the Minsheng Bank disclosure, according to the current preliminary grasp of the clues, the case of Zhang Ying by controlling other accounts as a capital account, fabricated false investment and financial products and financial transfer products, their own or instruct the individual employees to find the target customers, illegal recruitment Customer funds for personal control, part of the investment for real estate, cultural relics, jewelry and other fields, the funds raised did not enter the Minsheng Bank account system.

Anbang Insurance Gobbles Up Assets

Anbang has been in the headlines for many weeks in China, partially due to its large investment in Minsheng bank, where president Mao Xiaofeng resigned in the face of corruption charges. However, it was already in the news because it's on a wild buying spree.

Some recent news from the company:

China's Anbang to buy stake in Tong Yang Life

China's Anbang Insurance Group Co has signed an initial agreement to buy a controlling stake in South Korea's Tong Yang Life Insurance for around 1.1 trillion won ($1.01 billion), a South Korean

China based insurance company buys Waldorf Astoria New York.

Anbang Insurance Group has become the new owner of the famous Waldorf Astoria, the landmark hotel on Park Avenue, New York, the company bought the asset from Hilton Worldwide Holdings Inc. for an eye-popping $1.95 billion.

China's Anbang Insurance raises stake in Minsheng Bank

Anbang raised its stake in China Minsheng Banking Corp Ltd to 19.28 percent last week, according to a disclosure published on Monday by the Hong Kong Stock Exchange.

...In December, the Beijing-based insurer raised its stake in Chinese property firm Financial Street Holdings Co to 20 percent, while increasing its shareholding in China Merchants Bank Co Ltd to 10 percent.

....Two months later [December], Dutch insurer Delta Lloyd NV agreed to sell its Belgian banking operations to Anbang for 219 million euros ($245.78 million).

Anbang was founded in 2004 by seven companies including state-owned Shanghai Automotive Industry Group Corp and Sinopec.

The company has received attention from English-language press this week:

The Economist: The big Anbang

Investors have faith in the firm: last year Anbang raised some 50 billion yuan ($8 billion) through two private financing rounds, quintupling its registered capital to 62 billion yuan—more than even PICC and China Life, the biggest state-owned insurers. It also has lots of cash in hand, thanks to a 38-fold increase in revenues from life-insurance premiums to 53 billion yuan in 2014. This has come at a price: Anbang has offered eye-watering yields of nearly 6% on some of its investment products. Yet in 2013 its return on equity was roughly 25%, thanks to good investments of its own.

Mr Wu’s ultimate goal, apparently, is to transform Anbang into a conglomerate, in which insurance sits alongside banking, securities and fund-management. Fawning descriptions in the Chinese media talk of a “Warren Buffett model”, whereby Anbang draws on steady income from insurance to fuel its ambitions. But margins are much thinner in China’s immature insurance market, making Anbang’s income hard to predict. And even Mr Buffett took a few decades to establish his empire.

In China: Southern Weekly apologizes to Anbang for 'false reporting'

The Guangzhou-based Southern Weekly's investigative report into the Beijing-based Anbang — which made headlines last year for winning the bid to buy New York's famed Waldorf Astoria hotel — claimed that Chen Xiaolu, the son of former foreign minister Chen Yi, has been the "real controller" of the company since its establishment in 2004.

The article also alleged that current group chair Wu Xiaohui was previously married to the granddaughter of former paramount leader Deng Xiaoping and hinted that these connections have helped open many lucrative doors for Anbang.

Chen Xiaolu was quoted in the report as denying holding any posts within the company. He also went on social media to reject the allegations the same day the article was released.

Southern Weekly's apology has sparked heated debate among Chinese internet users, many of whom believe there is a bigger story behind the incident and that the more the newspaper says sorry the more suspicious it looks. Others speculated that Anbang must have some very powerful backers to be able to force an adacious paper like the Southern Weekly — which made international headlines for daring to protest government censorship in early 2013 — issue an unequivocal public apology.

Netizens have pointed to Anbang's close links to "princelings" — the offspring of high-ranking Communist Party officials — including the aforementioned Chen, Wu and Zhu Yunlai, the son of former premier Zhu Rongji, who is said to be an independent director of the group.

What's Driving Insurer Anbang's Big Bang?

A January 29 report by Southern Weekend brought public attention to Wu's connections with prominent figures such as 68-year-old Chen Xiaolu, the son of a famous People's Liberation Army leader, the late general Chen Yi, considered one of the fathers of modern China. Other notable associates include Zhu Yunlai, a son of former Premier Zhu Rongji, and Long Yongtu, China's chief negotiator in talks that led to the country's membership in the World Trade Organization.

Southern Weekend reported that more than 51 percent of Anbang is held by three private companies in which Chen Xiaolu has invested. Anbang's business registration says Chen is one of nine directors on the company's board of directors.

On January 29, Chen said he does not own Anbang shares but that he does serve as a company consultant. He said he and Wu have been business partners for 15 years, and that he has never gotten directly involved in the insurance company's operations.

Chen said acknowledged , however, that he had recommended in a conversation with Wu that Anbang should invest in U.S. dollar-denominated assets because, in his view, China's economy is slowing and the U.S. economy is recovering.

...Players in the insurance industry say Anbang has scored more regulatory approvals in recent years than its rivals. Special victories of late included permission to start a fund management firm, a pension insurance company and life insurance offices in Shanxi and Anhui provinces, and the cities of Shanghai and Shenzhen.

A CIRC official said Anbang has won fast-track approval partly due to Wu's initiative. He often visits the commission's offices, the official said, and follows up on CIRC action quickly.

But warning flags have been raised in the industry over whether Anbang's recent investments have exceeded regulatory limits. Media reports and business records indicate Anbang signed about 16 billion yuan worth of overseas deals last year.

Corruption Probes Hit The Banking System

Head of China Minsheng Bank resigns after reports he faces corruption investigation

China Minsheng Banking Corp (600016.SS) said on Saturday that its president Mao Xiaofeng had resigned for personal reasons, hours after several Chinese media outlets reported he was being investigated by China’s anti-corruption watchdog.

The reports said Mao had been taken away earlier this week by the Central Commission for Discipline Inspection (CCDI), the ruling Communist Party's top anti-corruption body, to "assist with investigations".

Minsheng, the country’s biggest private lender, posted a statement on its website saying it was aware of the reports concerning Mao and noted that the issue highlighted in the reports concerned Mao’s personal affairs and was not affecting the bank’s operations.

Former Minsheng Banking chief Mao Xiaofeng 'had links to wives of fallen leaders

The Beijing News reported on Sunday that Mao had paved the way for Ling's wife, Gu Liping , to work at a bank subsidiary for three years.

It said Yu Lifang, the wife of Su Rong, the former deputy chairman of the national political advisory body, also worked at the bank for a "long time" and sat on the bank board's audit committee after she retired.

Ling and Su were detained last year amid separate internal party investigations into alleged graft.

Minsheng was already the subject of intense media attention, with Anbang Insurance mounting an aggressive push to amass shares in the bank last month.

Trust Activity Still Falling, Stock Market Flows Rising, Banking Sector on Fire

The latest trust data from November shows falling asset flows (first chart). The second chart shows rates and maturities rising. The last chart breaks down trusts by type. The light blue box is securities trusts, such as those that invest in the stock market......

Meanwhile, capital is pouring into the stock market. Mingsheng Bank (600016.SS) is up about 40% in the past two weeks. This article from 21st CBH discusses how capital has been flowing into the stock, and how it set a new record for daily volume at ￥15.2 billion yesterday.

Minsheng Bank Takes 20% Haircut on Steel Traders' Credit Cards

Misheng bank is offering a deal to the Fuzhou Zhouning steel traders who are overdue on their credit card balances, allowing them to pay 80% and settle the debt.

民生银行罕见自认20%钢贸坏账

recently, Shanghai, Fujian Province, Zhou County Chamber of Commerce announced that the current Minsheng Bank Shanghai Branch to implement preferential policies for the repayment of the credit card overdraft Fujian Zhou Ning membership overdue. Specific preferential policies, only 80% of the principal amount of the need to deal with the remaining amount by Minsheng Bank Credit Card Department to apply for relief headquarters. Offers Until the end of June 2014, with effect from July will no longer enjoy the preferential policies.

21st Century Business Herald reporter multi-understand, and general customer credit card overdrafts, two years ago, in order to expand SME based steel trading business, livelihood often shares the line of credit to credit cards as a way of steel trade, steel trade credit limit of up to hundreds of thousands, or even hundreds of million.

Since 2012, with the continued downturn in the steel trade, Shanghai and other Yangtze River Delta steel trade credit crisis broke out, in addition to general corporate loans rose significantly overdue, the steel trade also on the high amount of credit card for a vicious overdraft, clear over the closing pressure large.

The Minsheng Bank Zhou Ning Ji steel trade customers preferential repayment period for the end of June 2014, it is the mid-year report as of June 2014, Minsheng Bank has highlighted the prevention and control of non-performing high pressure.

May 30, a Shanghai court reporter access to the network, within the next month, Minsheng Bank in Shanghai court case is still as high as 114, of which the vast majority is still the steel trade enterprises.

Latest News From China

China's new bankruptcy law, which makes it more difficult to declare bankruptcy, has caused companies to choose "hidden bankruptcy".

Throughout 2008, only 3,500 enterprises formally filed for bankruptcy in China. Hiding behind this tiny number however is the approximately 800,000 businesses that exited the market by either cancelling their registration or having their business license revoked.

The rise in the number of these hidden bankruptcies has emerged since a new bankruptcy code came into force in China on June 1, 2007.

In order to solve problems that have emerged since the introduction of the new legislation, the Supreme People's Court has accelerated it's timetable to release judicial interpretations of the law.

Professor Li Shuguang diagnoses the problem:

"Among those 800,000 enterprises, some managed to responsibly resolve issues related to creditors' rights and to settle their debt, but many enterprises simply cancelled their license or registration in order to avoid debt obligations. This kind of withdrawal can be deemed as malicious bankruptcy or even credit fraud."

Li noted that there were far more bankruptcy cases when the former corporate bankruptcy law, introduced in 1986, was in effect. At that time bankruptcy was mainly instructed by government policy.

According to Li, these new methods of withdrawal provide no guarantee for creditors' interests and also bring about a higher risk of credit default in the market as a whole and amounted to a huge waste of quality assets.

Not only were these enterprises not making use of the market exit mechanism provided by the Law on Enterprise Bankruptcy, but in doing so, they also failed to take advantage of the the market economy's ability to efficiently allocate resources.

He believed that government intervention was the major cause of the huge drop in bankruptcy cases, saying "the Government has intervened too much in the market."

Prof. Li said, the reason a lot of enterprises that should make use of bankruptcy procedures don't, is because so many government officials fail to recognize that bankruptcy is a common method utilized by market economies. Bankruptcy procedures are used by market economies as a way to allocate resources.

My take: we already knew the bankruptcy law was too strict and many factory owners just walk away. Reform will cause a surge in bankruptcies, but it would be a positive step since the companies are closing anyway, and as Professor Li says, it leads to misallocations of capital.

Minsheng Bank (600016.SS) wants to offer H-shares:
民生银行H股发行再上路

民生银行相关人士表示，此次H股发行股数不超过发行后总股本的15%，并授予全球簿记管理人不超过上述发行的H股股数15%的超额配售权。

按照2008年末民生银行188.23亿股的总股本计算，H股发行将不超过33.2亿股，再加上不超过15%的超额配售权，此次发售H股最多不超过38.18亿股。

“具体价格与规模届时将视市场情况而定。”上述人士表示。

截至2008年底，民生银行的资本净额707.67亿元，其中核心资本513.07亿元；资本充足率为9.22%，核心资本充足率为6.6%。

民生银行董事会办公室人员告诉记者：“何时启动再融资、以何种方式再融资一直是其董事会和管理层考虑的议题。通过发行H股，能够适时补充资本，提高资本充足率；能通过进入国际资本市场，为推动民生银行的管理国际化战略创造有利条件；同时拓宽融资渠道，发行H股也能帮助民生银行提高海外影响力和品牌知名度，有力推进民生银行的国际化战略，从而更好地促进民生国际业务的拓展和开发。”

“民生银行这些年扩展速度比较快，股份制商行中属于业务增长速度较快的银行，为了支撑业务发展，为补充资本金还是需要开辟融资新渠道，H 股策划时间比较长，亚洲经济率先复苏，香港股市目前比较活跃，对银行来讲更符合经济利益。此次海外扩展和展开国际业务有直接帮助。”中央财经大学中国银行业研究中心主任郭田勇认为。

今年3月下旬，民生银行发行了50亿元的混合资本债券，但是核心资本充足率偏低。致使银行业务发展受到制约，给信贷规模带来不小压力。

Bloomberg also reports:

Beijing-based Minsheng plans to sell as much as 15 percent of its enlarged share capital on the Hong Kong stock exchange for the first time, it said June 5. The lender may increase the offering by 15 percent if there’s enough demand.

Minsheng’s capital shortage threatens to crimp profit growth amid a government-backed lending boom aimed at boosting expansion in the world’s third-largest economy. The bank, founded by 59 private investors including pig-feed tycoon Liu Yonghao, aims to increase profit by 35 percent this year after growth slowed to 25 percent in 2008, the slowest pace since its 2000 listing in Shanghai.

“Investors started to revalue Chinese banks after concluding that the profit decline trend has been stemmed, if not reversed,” said Liu Xiaochang, a Nanjing-based analyst at Huatai Securities Co. “Minsheng is the first to take advantage of this opportunity.”

The lender’s capital adequacy ratio narrowed to 9.22 percent at the end of December, lower than the 10 percent minimum required by the country’s regulator and the 13.4 percent average of the nation’s 14 publicly traded banks.

My take: Mingsheng is doing the same as Citigroup, Bank of America, Goldman Sachs and others. Get your money while the gettin' is good.

Chinese local governments need more capital:

The NAO conducted a survey in 18 provinces lately and in a report released on May 18, it revealed that some local governments had lagged in channeling the required funding timely, with the poorest performing province managed to release only 48% of the funding earmarked.

The Economic Observer learned that majority of the local funding came from policy-driven bank loans, while local bonds - by late April, 111.8 billion yuan worth of bonds issued - and contributions from local treasuries formed a minor part of the financing. Meanwhile, participation from private capital was negligible.

For locally initiated investment projects, even if bank loans were secured, the local governments concerned would need to raise the required registered capital, which constituted some 20% to 40% of the projects' cost.

Sources from the banking industry and local authorities told the EO that red tape and shrinking local revenues - resulted partly from tax cuts to stimulate the economy and reduced collections from less profitable companies - had added pressure to timely financing from local governments.

A state-owned bank researcher estimated that the grand total of local financing required - including that for projects mapped out under the stimulus package and other supplementary costs - could run into 5.2 trillion yuan, nearly double that of all the local treasuries' revenues combined - 2.8 trillion yuan - last year.

...To relieve financing pressure at local level in meeting the required registered capital for investment projects, the EO learned that Chinese Finance Ministry was planning to expand local government bonds issuance in the first half of 2009.

My take: good for the local bond markets. Also, China's still getting far more stimulus into the economy than the U.S., even if there's a funding bottleneck. It may turn out to be a blessing if local governments focus only on the most productive projects.