Source of this article: Times Finance Author: Zhou Mengmei Recently, multiple administrative penalty information disclosure forms disclosed on the official website of the State Financial Supervision and Administration Bureau showed that in November last year, the Hunan Financial

Source of this article: Times Finance Author: Zhou Mengmei

A few days ago, multiple administrative penalty information disclosure forms disclosed on the official website of the State Financial Supervision and Administration Bureau showed that in November last year, the Hunan Financial Supervision Bureau imposed penalties on Hunan Caixin Trust Co., Ltd. (hereinafter referred to as "Caixin Trust Co., Ltd." Caixin Trust") issued a fine. Due to illegal redemption and other acts, Caixin Trust was fined 3.3 million yuan.

Caixin Trust was established in 1985 with a registered capital of 4.38 billion yuan. It is a core subsidiary of Hunan Caixin Financial Holdings Group and the only trust institution in Hunan Province. Hunan Caixin Investment Holding Co., Ltd. and Hunan Provincial State-owned Investment and Operation Co., Ltd. hold 96% and 4% of its equity respectively. Both shareholders are state-owned enterprise legal persons.

Since 2018, rigid redemption has been banned for many years. However, in the past two years, many trusts have still been punished by regulatory authorities for violating regulations.

The then chairman of Caixin Trust was warned

The fine showed that Caixin Trust’s illegal activities mainly included untrue risk asset data; submitting statements that concealed important facts to regulatory authorities; illegally carrying out trust business for land consolidation and development; Insurance companies provide a single trust channel for direct or disguised investment; they facilitate commercial banks and other financial institutions to avoid supervision; they fail to identify qualified investors and subscribe to trust products in violation of regulations; they conduct rigid redemptions in violation of regulations, resulting in loss risks.

The penalty imposed on Caixin Trust this time was a "double penalty", and the relevant person in charge of the company was also warned.

Wang Shuangyun, then chairman of Caixin Trust, was directly responsible for Caixin Trust’s illegal behavior of rigid redemption that caused loss risks and was given a warning.

In addition, Zhan Hua, then general manager of Caixin Trust Wealth Management Center, Yang Shijie, then head of the first team in Shanghai of Caixin Trust’s innovative business headquarters and head of the first team in off-site business headquarters in Shanghai, and then head of the first team in Guangzhou of Caixin Trust’s off-site business headquarters , Wu Feng, general manager of the remote business headquarters, was also warned.

On November 15, Caixin Trust announced on its official website that this was a penalty imposed by the regulatory authorities on the results of the company’s external special audit of the trust industry in 2022. The issues involved all occurred before the end of March 2022 and were accumulated over the years. After the special audit report was issued, the company attached great importance to it, completed rectifications in accordance with the requirements of the audit and regulatory authorities, and improved the corresponding systems and mechanisms. This penalty will not affect the company's normal operations.

Source: Caixin Trust official website

It is worth mentioning that the new helmsman of Caixin Trust has officially taken office not long ago.

In April this year, Wang Shuangyun resigned from all positions including chairman and director of the company. At the end of August this year, Hunan Financial Supervision Bureau approved Chairman Zhu Changshou’s qualifications. Zhu Changshou previously partnered with Wang Shuangyun as the president of Caixin Trust. In terms of

performance, in April this year, Caixin Trust released its 2023 annual report, achieving revenue of 771 million yuan in 2023, a year-on-year decrease of 28.64%; net profit of 658 million yuan, a year-on-year decrease of 5.73%.

According to data from Enterprise Alert Communication, in the first half of 2024, Caixin Trust achieved revenue of 194 million yuan and net profit of 186 million yuan.

Many trust institutions have been fined for violating regulations.

Rigid redemption has been banned for many years.

In April 2018, the central bank, China Banking and Insurance Regulatory Commission and other departments jointly issued the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" (hereinafter referred to as the "New Asset Management Regulations"), stipulating that asset management business is an off-balance sheet business of financial institutions. , financial institutions shall not promise to guarantee principal and return when conducting asset management business. When payment difficulties arise, financial institutions are not allowed to advance funds for payment in any form. Financial institutions should implement net value management of asset management products.

In the past two years, many trust companies have been punished for violating regulations.

In August this year, punishment information released by the Hubei Supervision Bureau of the State Administration of Financial Supervision showed that BOCOM International Trust was fined 1.2 million yuan for various behaviors such as rigid payment of risky projects in violation of regulations and failure to perform post-loan management duties.

In November 2023, Industrial International Trust was fined 2.95 million yuan by the Fujian Supervision Bureau of the State Administration of Financial Supervision and Administration due to illegal issuance of land reserve trust loans and illegal rigid redemption. At that time, he was the deputy general manager of Industrial International Trust Business Approval Center. Manager Shao Yongwei was warned.

Illegal redemptions in the trust industry have a great negative impact on the entire trust industry.

The relevant person in charge of the People's Bank of China once said that rigid redemption deviates from the essence of asset management products of "being entrusted by others and managing wealth on behalf of others", raising the level of risk-free rate of return, interfering with fund prices, and not only affecting the market's role in resource allocation. It has also weakened market discipline, causing some investors to take risks and speculate, financial institutions to fail to fulfill their responsibilities, and moral hazard to be more serious.

Why do regulatory authorities strictly crack down on “rigid redemption”?

Jinle Functional Trust Industry Analyst Liao Hekai told Times Finance: "Cracking down on rigid redemption can indeed better improve the benign operating environment of the entire industry. On the one hand, it can avoid the accumulation of long-term industry risks caused by short-term bad money driving out good money, which will help To encourage professional due diligence in financial institutions, On the other hand, improving the professionalization of practitioners can improve the level of investor education in financial institutions, so that investors' actual risk preferences match the risks of actual assets, and reduce legal risks and potential risks formed in the initial redemption process. profit transfer and moral hazard, and ultimately achieve the goal of long-term sustainable operation.”