Industrial & Commercial Bank of China Ltd., the nation’s largest lender by assets, is among banks that have stopped distributing trust products as the risk of defaults mount, the Securities Daily reported today.
China Construction Bank Corp. (601939) also ceased marketing the high-yield investment products that have been used to raise funds for companies that don’t have access to cheaper financing such as bank loans, the newspaper reported today, citing unidentified employees of the banks.
China averted its first trust default in at least a decade in January as investors in a 3 billion-yuan ($482 million) high-yield product -- issued by China Credit Trust Co. and marketed by ICBC -- were bailed out days before it matured. Construction Bank is the custodian of a similar product created by Jilin Province Trust Co., which has missed at least five payments, Shanghai Securities News reported last month.
Press officers at Beijing-based ICBC and Construction Bank said they couldn’t immediately comment on the report.
About 20 billion yuan of trust products had repayment difficulties in 2012, accounting for 0.27 percent of the industry’s assets at that time, according to the China Trustee Association. China’s trust assets surged 46 percent in 2013 to a record 10.9 trillion yuan, underscoring investors’ appetite for products that pay more than bank deposits even as default risks mount.
About 5.3 trillion yuan of trust products will be due this year, up from 3.5 trillion yuan in 2013, Haitong Securities Co. estimated in January.
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