Here We Go Again: WMP Failures

Aside from the 2017 National Congress, not much happened last year. The good times rolled as they had in 2016. Now the bill is coming due and Chinese media headlines are swinging from optimism to pessimism.

iFeng: 招行10亿理财违约 违约潮或至你躲得过吗？

China Merchants Bank 1 billion product default!

Millions in investors' interest disappears without a trace! Shouldn't you go to the bank to see if your money is still there?

That's sounds a little alarmish.

Recently, a China Merchants Bank private banking clients broke the news that its first branch in China Merchants Bank Beijing Branch of customers manager body, to invest in financial products in 2013, suffered a breach of contract in September 2017.

The following is a contract product, according to the contract ( "investment wealth - China Merchants Bank - Hony sandwich special asset management plan asset management contract"):

The information management program held by China Merchants wealth asset managers Asset Management Co., Ltd., China Merchants Bank Beijing Branch as the custodian of assets, corresponding to the subject of raising capital for mezzanine fund subsidiary of Legend Holdings Hony Capital - the size of 1 billion Hony one ( Shenzhen) mezzanine investment Center (limited partnership).

What can investors look forward to after putting up 20 million yuan that was supposed to pay 11 to 13 percent in interest and profits? Return of their capital.

By convention and banks, investors in September 2, 2016 you can get back the principal and interest from the bank's own investment, but the question arises, Merchants Bank account manager, said:

The fund deadline 3 + 1 structure, according to "information management contract", the general partner is entitled to the funds extended period of one year. In other words, the fund management reserves the right to postpone the deadline fund to September 2, 2017.

Then China Merchants Bank one-year extension of the expiration date of the product, but in September 2, 2017, the product was in default, Merchants Bank account manager again declared:

Investors of 20 million yuan investment funds, or can only recover the principal, can not guarantee interest or "very little."

20 million of principal, in accordance with the annual yield of 11% to be considered, the amount of interest after 4 years will be 10.36 million yuan, China Merchants Bank twice defaults, investors lost millions of dollars in interest!

Three of the fund's six investments failed:

Failed to exit the three projects are:

Rongzhong small loans (two)

According to the fund management reports for the first pen into the public 150 million yuan investment in small loan, quit in October 2014, realized investment gains 22.9 million yuan; later, Hony an additional $ 150 million to carry out two investment, annual interest rate 16%, but by the end of 2015, six months after the extension, due to the liquidity reasons, failed to repay small loans into the public when the loan matures in June 2016, it has been delayed due. "

In the heavy machine

Hony Hony a joint investment in August 2014 invested enterprises Zoomlion, investment Chery Heavy Industry (later renamed the United Heavy Machinery). Among them, a contribution Hony 113 million expected annual rate of return of 15% in the heavy machine plan by the end of 2015 listed three new board.

But with the United Heavy Machinery sprint three new board is blocked, the program read: major shareholders repurchase will be the way to achieve out in 2017. But so far, the project still failed to exit.

Shanghai Yu Feng project

Hony one in June 2015, July and October, a total of three times to provide 130 million yuan to Shanghai Yu Feng, respectively, the use of funds to supplement working capital borrowers. As banks pump-prime crisis caused by debt, funding strand breaks Shanghai Yu Feng, Yu Feng Shanghai is expected to total liabilities of $ 1.0 billion, total assets may be disposed of only 320 million yuan, seriously insolvent.

Invested in six projects, three there is a problem, this is the root cause of product breach!

Background:

WSJ: China’s Most Dangerous Bank
Bloomberg: Bad-Debt Experts, China's Calling