Banking & Finance

Buying trust

CICC’s transformational deal

Buying trust

Regular readers of WiC will know that trust companies have been a source of consternation for regulators. Now it emerges that preeminent domestic securities firm CICC is on the verge of gaining a controlling 35% stake in one of them, Zheshang Trust.

The 21CN Business Herald says that this is part of a plan in which the CBRC (the banking regulator) wants large state-backed shareholders to “make the trust business more secure and robust”. CICC hopes for plenty of synergies, given its extensive client base, adds 21CN.

“Trust companies are like department stores for the financial sector”, says Li Yang, an analyst at Use Trust, a research firm focused on the Chinese trust industry. “Securities companies can expand their playing field to include businesses that otherwise are off-limits to them, including lending,” says Li.

China currently has 52 trusts. But should the CICC deal go through, it would mark the first time a local investment bank has gained control of a trust. (For our guide to trust companies, see WiC98).

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