Cover: visual China
a paper complaint
China Merchants Bank sued Everbright Capital and led a cross-border merger and acquisition case.
In 2016, Everbright Jiahui (Everbright Capital wholly owned subsidiary, Everbright Capital is a wholly owned subsidiary of Everbright Securities) set up the Jixin Fund (Shanghai Jixin Investment Consulting Partnership) to acquire a total 65% stake in MP&Silva, a European sports copyright operator. MP&Silva was later in operational difficulties and was dissolved by the London High Court in October 2018 for arrears. The investors of Jiexin Fund are facing substantive risks, and the parties start the recovery procedure, which has triggered a series of litigation and disputes.
The total fund is 5.2 billion yuan, of which China Merchants Fortune and Aijian Trust are the priority investors, totaling 3.2 billion yuan. According to the agreement, Everbright Capital issued the "Case of Complementary Letter", clarifying that when the priority partner can not achieve the exit, the company will bear the corresponding difference to make up the obligation.
In 2018, the project was at risk, and the parties began the pursuit procedure. First, Everbright filed a lawsuit against Storm Group for failing to fulfill the repo Agreement, claiming 751 million yuan, and then China Merchants Bank sued Everbright Capital for failing to fulfill the Agreement, claiming nearly 3.5 billion yuan.
The repurchase agreement and the difference supplement letter here, as a kind of undercover guarantee, are the key to prying the low risk preference funds of banks in the design of capital management products, and they are also the catalysts for the great leap forward of capital management business.
In the case of this case, the Storm Group issued the , and the repurchase was made within 18 months after the end of the agreement, and the confidence of the Everbright Capital Group Office was given to the Everbright Capital Group Bureau. In the three months, RMB 5.2 billion was mobilized to complete the M & A; in the same way, the
The problem is that, in spite of the creation of a low-risk artifact, the fact that the underlying transaction is at a high risk is not changed after all, despite the creation of a low-risk artifact. As soon as the underlying assets are out of question and the start-up procedure, it is found that so-called bottom-up guarantees are not necessarily useful, at least in the process of legal proceedings.
For example, in this case, Everbright Securities issued an announcement in February 2019, stating that “the validity of the “Career Supplement” is controversial, and the actual legal obligations of Everbright Capital are yet to be judged”. The validity of the "Career Supplement Letter" was questioned, and there is a paper complaint today.
It is a long process that the right and wrong in the pleadings and the determination of responsibility are left to the court to decide. The warning significance behind the incident is worthy of everyone's deep consideration.
In the past few years, how many high-risk projects have been packaged into low-risk products by means of the Underlying Guarantee Agreement?
How many of the bottom-to-bottom agreements will become a multi-party dispute in the process of the entity's economic downturn and the bottom-level asset-intensive detonation?
Asset management products, no matter how complex the structure, can only spread the risk and cannot eliminate the ultimate risk from the entity. Conversely, when an entity breaks out a risk, the security of the asset management product will no longer be strong.
Due to the high threshold, bond-issuing enterprises have always been the leader in the corporate group. When bonds are intensively defaulted, they are the signal that the cornerstone of the safety of asset management products is loose.
In 2012, the stimulus policy declined and the real economic risk was gradually exposed. The bank's first wave of default on corporate loans, and the bad rate has increased rapidly, but the bonds have not changed, which once became a safe haven. By 2018, the bond market also reached its default peak.
According to the "2017 China Banking Financial Market Report", bonds are the largest allocation of bank wealth management assets, accounting for 42.9%, and non-standard claims accounted for 16.22%, which together account for nearly 60%. Debt assets frequently defaulted and began to pull down the security of wealth management products from the industry level.
The financial strength of the commercial bank is strong, the ability to absorb the loss is strong, the security is temporarily out of time, but the trust power is slightly weak, and the emergence of the high-risk product-intensive default is already in place.
By 2018, the scale of the trust industry's risk projects is up to $15 billion, up from Q1 in 2019 and up to $28.3 billion. The two-quarter risk exposure is still accelerating from the late news of some of the products in the recent Sino-Thai Trust, the Anxin Trust and the Bohai International Trust.
Finance is based on the real economy and is affected by the real economy. Regardless of P2P explosions, bond intensive defaults, increased trust risk projects, and increased pressure on bank wealth management risk management, the financial system must pay the price after the changes in the real economy operating environment.
Risky risk avoidance. Private enterprises and small and micro enterprises are the hardest hit areas, and funds are accelerated to escape, resulting in a snowball effect of risk contagion. Since the second half of 2018, the regulatory authorities have begun to vigorously guide funds to support the private economy and the small and micro economy, with remarkable results. Since 2019, bond intensive defaults have been contained.
However, there is no fundamental change in the macro environment, and the relief measures at the financial level can stop bleeding for a moment, but the operation still needs to be done, and the pain of the upgrading of economic structure is inevitable.
From the medium and long-term perspective, the transformation and upgrading of the real economy, the continued promotion of de-leverage, the overlapping of trade disputes, the US dollar interest rate hike cycle and other factors, the enterprise level will continue to differentiate, and the soil of large capital management has changed.
New soils require new logic and new rules.
New rules for asset management
In April 2018, the guiding opinions on standardizing the Asset Management Business of Financial institutions (referred to as the new regulations on asset management) were issued, and the development track of the industry was reversed by issuing a transformational prescription of "reducing leverage, breaking through exchange and removing nesting" to conform to the trend, cut the times and harm the times, and reverse the development track of the industry.
The core demand for leverage reduction is debt reduction, which is intended to control risk. If the underlying assets are good and the liabilities are more good, the current underlying assets are in breach of contract, and the risk can be controlled only when the leverage is lowered.
In terms of specific requirements, the new regulations will limit the leverage ratio of open public offerings and classified private equity products to 140%, and the upper limit of closed public offerings and private equity products to 200%, and require financial institutions not to manage products. Pledge financing and amplify leverage.
Rigid payment gives the characteristics of "high return and low risk" of wealth management products, and creates the myth of the rapid development of large capital management. However, the only exchange is tolerated because there is little need for it in practice, such as data showing that financial institutions have paid less than 6.6 percent of their wealth management products in 2013 and 2016. In other words, of the 10,000 wealth management products, only 6 lost the principal, and the principal loss rate was less than 10%.
The underlying asset non-performing rate is approaching zero, and the just-doing hat will not bring substantial risks to the financial system, and it will also increase the attractiveness of the asset management products. After 2018, the risk pressure on the underlying assets of wealth management products increased greatly. At this time, the rigid redemption was announced to the market, which will undoubtedly lead to the burning of the real economy risks to the financial system.
At this time, the break-to-find financial institutions are living and dying, and breaking the contract will become the top priority of the new regulations.
In addition to clarifying that “financial institutions may not promise to protect their own income when they conduct asset management business, and financial institutions may not pay in any form when there is difficulty in redemption,” the new rules for asset management have been precisely designed at the institutional level.
One is to build the wall. Capital management business is isolated from other businesses, capital management products are isolated from agency products, capital management products are isolated from each other (separate accounting, separate accounting), and off-balance sheet isolation (financial management is completely off-balance sheet). In addition, qualified financial institutions should set up financial subsidiaries to specialize in capital management business to achieve physical isolation at the institutional level.
The second is net worth management. Calculate the true value of the underlying assets of the wealth management products and disclose them to make the losses visible. For example, in the case of stocks and funds, the value floats daily to resolve the investor's expectations.
Third, severe punishment has just been accepted, and there is a prize for reporting.
The asset management products are nested at the same level, that is, A product investment B, B product investment C, C product reinvests in a certain underlying asset, under the multi-layer nesting, the underlying assets are difficult to penetrate, and risk management floats on the surface. Due to the weakening of risk constraints, the scale is easy to expand and expand, and the risk is amplified.
In the new situation, except nesting is lightning removal, the new rules of capital management clearly require that nesting should not exceed one layer, peel off the nesting cover, make the underlying assets surface, transparent risk management, and cut off the risk contagion chain formed by multi-layer nesting among financial institutions.
The above three major punches, powerful punches, smashed the illusory prosperity of the big capital management.
According to Guotai Junan statistics, at the end of 2018, the total size of the asset management industry decreased by 9% year-on-year, of which the trust shrank by 13.5%; the brokerage asset management contracted by 21%, and the bank's wealth management products accounted for 27% of the net wealth, up 15% year-on-year.
Financial management is the most basic financial need. At least nine of the ten people need financial services. Therefore, the asset management will not die, it will only get better and better.
In the past decade, the asset management has grown from small to large, and has grown into a large market of level 0(in 2017, the total scale of the whole industry was more than 1200,000billonuan, and repeated calculation was repeated under multi-layered nesting, and the number of licensed institutions was over 25,000(more than 95%of them private fund managers and about 800 banks providing financial services)). Even so, it still fails to satisfy the needs of residents' financial management, which shows that the proportion of financial assets in China's family wealth structure is too low.
According to the 2018 Global Wealth Report released by Credit Suisse, by the end of June 2018, the total size of Chinese household wealth was 51.9 trillion US dollars, accounting for 16% of the world, second only to the United States 31%. From the perspective of structural distribution, the financial assets of the United States and Britain account for nearly half of the total. In China's family wealth, seven become real estate, accounting for less than 20% of financial assets, and more than half of them are cash assets.
Seeing such data, it is natural to draw a conclusion that Chinese residents have insufficient allocation of equity assets such as stocks. However, if the performance of the Chinese and US stock markets is compared with the US stock market wealth appreciation effect, the A-share market is indeed unattractive.
The A-share market is in a downturn, and institutional investors are also underperforming, making it difficult to capture the trust of investors. According to the statistics of Huajin Securities, in the decade of 2008-2017, institutional investors ran into retail investors for six years, and they ran slightly in three years, only a big lead in 2017. This kind of investment performance, investors prefer to be retail investors, do not want to buy funds, equity wealth management can not do.
Falling from the ground, starting from the ground, the weak link now is the direction of the future breakthrough.
In the past decade, the capital management business has risen by fixed income assets (mainly all kinds of liabilities), but in the environment of high leverage ratio and continuous deleveraging of policies in the real economy, there is no room for fixed income products in scale. With the rise of the new economy, the direct financing market dominated by equity financing has ushered in development opportunities.
Taking the United States as an example, the new and old kinetic energy conversion in the 80 's of the 20th century, from 1980 to 1995, the new economy accounts for 14% to 21%; in the same period, the direct financing proportion is increased from less than 10% to more than 70%.
In the case of the asset management industry, only active participation in the equity market can create a brilliant growth.
From the perspective of foreign countries, the proportion of stock investment in bank asset management products is basically between 20% and 40%. Take the top three global Dow Global in the asset management industry as an example. The equity assets account for nearly 60% of the total. Income-based assets accounted for only 16%.
Bank wealth management products in China were once prohibited from investing in equity products. If the notice on further standardizing the Investment Management of personal Financial Business of Commercial Banks (Banking Supervision (2009) 65) explicitly requires that "financial funds shall not be invested in publicly traded stocks in the domestic secondary market or in securities investment funds related to them; financial funds shall not be invested in the shares of unlisted enterprises and shares of listed companies that are not publicly issued or traded", with the exception of stock renewal.
However, the new regulations on asset management have abolished the above ban, and bank financing funds have been able to participate in the stock market nuggets.
Financial resources entering the market to drive the stock market to turn the cattle, the stock market to cattle to attract more wealth management funds, the two help each other, or will open the golden age of A shares and large capital management.
Desilting and detoxification
To meet a bright tomorrow, we need to solve the immediate problems.
It is not difficult to see from the P2P filing process that it is easy to set the direction for the development of the industry, and it is difficult to build a bridge from today to tomorrow.
The interim measures on online loan were issued in August 2016, indicating the basic framework and direction of P2P development, but in order to approach this direction of compliance rectification and reform, it has been nearly three years, and up to now, there is still a lack of clear conclusions. During this period, thousands of platforms exploded, running away, testing market confidence and regulatory patience again and again.
Similarly, the new rules of capital management make people see hope, but the remaining issues cannot be ignored.
Behind the China Merchants Bank v. Guangda case, the corresponding problem is the redemption of the 3.5 billion wealth management principal and interest. In the nearly tens of billions of large capital management systems, how many potential problems need to be resolved?
Breaking the need for a gradual picture, the risk exposure of stock wealth management products still needs to be digested by financial institutions. However, not all institutions have the ability to cover the bottom.
Of the 25000 capital management institutions, private equity institutions have experienced a wave of thunder in 2018; recently, trust financial risk incidents have been exposed one after another; on the other hand, P2P withdrawal continues.
Linking these events together outlines a picture of passive or active demining of the financial system. Let the out-of-risk financial institutions go out, similar to the organism to remove the spoiled tissue, the industry is safe, but when the dredging and detoxification, the institutional level of pain is inevitable.
This article is originally written by "Hongyan whispering". The author is the assistant of the president of Suning Financial Research Institute. Xue Hongyan
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