Furious Chinese Investors File Complaints Over Trust Firm’s Missed Payments, Reuters Reports

BEIJING – Frustrated investors in trust products from a major Chinese shadow bank have submitted complaint letters to regulatory authorities, urging them to intervene after the prominent trust company failed to make payments on numerous investment products.

Zhongrong International Trust Co., which managed assets totaling approximately $108 billion at the end of 2022, has not met payment obligations on several products since late last month. This situation has intensified concerns regarding the stability of China’s financial system, particularly amid an ongoing property market crisis and a rapidly slowing economy.

Investors, who are owed money by Zhongrong, have called on the National Financial Regulatory Administration (NFRA) and the Central Commission for Discipline Inspection (CCDI) to take action. Letters addressed to these agencies detail the investors’ grievances and requests for intervention.

Since July 28, Zhongrong has failed to make payments on at least 22 investment products, with an outstanding value estimated between 160 billion yuan and 200 billion yuan (approximately $21.96 billion to $27.43 billion). These issues affect nearly 30,000 investors, as noted in a letter sent to the NFRA. Two investors, who wished to remain anonymous due to the sensitive nature of the situation, confirmed the information contained in the letters, although it remains unclear how many investors have appealed to the regulators.

The trust company and the two regulatory bodies did not respond immediately to inquiries regarding the matter.

In their letter to the NFRA, investors expressed hope for state support, requesting that Zhongrong Trust directly address the concerns of its clients. "Every day, a large number of people gather at the business offices of Zhongrong Trust praying for an explanation… investors are engulfed in endless fear and worry," the letter stated.

Zhongrong’s parent company, Zhongzhi Enterprise Group, which reportedly manages $137 billion in assets, has informed investors that it needs to restructure its debt due to a liquidity crisis.

Investors have demanded that Zhongrong provide detailed reports on the underlying assets of the defaulted products, noting that the firm has historically had significant exposure to the troubled real estate sector, which has been facing mounting debts and defaults since 2021. They also requested an immediate written statement from Zhongrong to clarify the situation and outline a timeline for repayments on overdue products.

"We hope that officials will pay close attention to Zhongrong Trust and prevent this situation from evolving into a severe economic crisis," the letter to the NFRA emphasized.

In a separate letter to the CCDI, investors accused the management of Zhongrong of neglecting their responsibilities, which has resulted in substantial losses for investors.