Lai Xiaomin hid several tons of cash privately, setting a new record for super corrupt

The case of Lai Xiaomin, the former chairman of Huarong, once again revealed shocking facts, and Caixin exclusively reported the relevant details.

From August 3rd to 4th, Huarong Group held a two-day 2018 mid-year work meeting in Beijing, and only the principals of all branches and subsidiaries participated.During the meeting, part of the case of Lai Xiaomin, the former chairman of Huarong, was notified at the meeting.

The case of Lai Xiaomin, which was settled on April 17, 2018, is called the 4middot;17 case.Before and after the incident, Caixin reporters have investigated the context and clues of the Lai Xiaomin case in many ways. The information revealed in these recent meetings has revealed some shocking details of the case. For example, the investigators were in several properties of Lai Xiaomin.A total of 270 million yuan in cash in local and foreign currencies was found.

This amount set a new record in April 2014 when Wei Pengyuan, the former deputy director of the Coal Department of the Energy Bureau, was found at home with 230 million yuan in cash and burned out four money counters on the spot.

The 270 million yuan is equivalent to about 3 tons. Put together, it exceeds 3 cubic meters. The key is that this is not the entire amount of Lai Xiaomin's corruption case, but just the tip of the iceberg.This case has become the largest financial corruption case since the founding of New China. Caixin has been following up exclusive reports, including where the huge amount of corruption funds in the Lai Xiaomin case came from, what clues and contexts Lai Xiaomin was involved in, and how Huarong notified Lai Xiaomin of the double-faced faction.The situation of the three-faced person, what is Huarong's most urgent problem at the moment, etc.

Three months after the Huarong case, Huarong is still in the whirlpool.Although it is in the process of vigorous self-examination and self-correction, and writing reports and reflections, it is hard to say that Huarong has full confidence in eliminating Lai Xiaomin's poison.For example, relevant personnel adjustments have just begun and are far from being in place; and the disposal of risky assets has yet to be further advanced.How did this largest financial corruption case since the founding of New China come about?How can Huarong's long-standing malpractice be uprooted, and a clean Xinhuarong be restored to the market?This is still a major doubt lingering inside and outside Huarong.■ Huarong Lai Xiaomin was finally investigated, what happened

Under the will of its head, Lai Xiaomin, the state-owned financial group Huarong has imported tens of billions of financial resources into a little-known private company. What is the secret behind this?

No one expected that the official investigation of Lai Xiaomin came so urgently.Until now (late night on April 18), the official website of China Huarong Asset Management Co., Ltd. (hereinafter referred to as Huarong) still has a photo and a brief introduction of Lai Xiaomin as party secretary and chairman.

At 9:00 a.m. on April 17, Lai Xiaomin was notified to attend a meeting of the China Banking Regulatory Commission and was announced on the spot to be investigated by the organization.According to the Caixin reporter, on Saturday three days ago, Lai Xiaomin was asked to accept an interview with the organization.

On the afternoon of April 12, Huarong held a media meeting at the China Banking Regulatory Commission.Lai Xiaomin arranged for three group leaders to introduce Huarong's performance and experience.At the same time, he himself planned to accompany senior leaders to visit the United States, but he did not expect to pass the review of relevant departments.After that, Lai Xiaomin still appeared and spoke at the Boao Forum in Hainan, but he did not get the opportunity to be arranged to take a group photo with the leader as usual.All these signs indicate that the day when Lai Xiaomin will be formally investigated is approaching.

On the evening of April 17, the website of the Central Commission for Discipline Inspection and the State Supervision Commission announced that Lai Xiaomin was subject to disciplinary review and supervisory investigation for suspected serious violations of discipline and law.This is also the first major financial case announced after the Central Commission for Discipline Inspection and the National Supervisory Commission jointly took office.

On the morning of April 18, the China Banking and Insurance Regulatory Commission went to Huarong to announce the appointment of a new leadership team.Wang Zhanfeng, the 51-year-old former director of the Guangdong Banking Regulatory Bureau, served as the party secretary of Huarong and was nominated by the board of directors for the chairman; the post of president of Huarong, which had been vacant for eight months, was replaced by the 58-year-old former deputy secretary of the party committee of Dongfang Asset Management Co., Ltd.Li Xin, chairman of the board of supervisors, took over.

On April 18, the special investigation team of the Central Commission for Discipline Inspection officially entered Huarong.The investigation will officially begin.

Ⅰ. Surprisingly courageous

Lai Xiaomin was born in 1962 and is 56 years old. He is from Ruijin, Jiangxi Province. He graduated from Jiangxi University of Finance and Economics with a major in planning in 1979.In January 2009, he joined Huarong as the deputy party secretary and president. In September 2012, he was promoted to the party secretary and chairman of Huarong.In recent years, there have been rumors that Lai Xiaomin will be investigated, but it has not been confirmed.

Lai Xiaomin has worked in the financial supervision department for many years.In July 1983, Lai Xiaomin joined the work of the People's Bank of China, and successively served as the deputy director and director of the Central Fund Division of the Planning Fund Department of the People's Bank of China, the director of the Second Division of the Bank, the deputy director of the Credit Management Department, and the deputy director of the Second Bank Supervision Department..In 2003, 41-year-old Lai Xiaomin was transferred to the China Banking Regulatory Commission as the deputy director of the second banking supervision department. In 2005, he was promoted to the director of the general office.Since taking charge of Huarong, Lai Xiaomin has sought to return to the China Banking Regulatory Commission as the vice chairman, and even to become the director of the office of the Financial Commission, but he failed.

Lai Xiaomin's former wife was the general manager of the credit management department of the head office of China Everbright Bank, and had retired more than a year ago.The two have a daughter and grandchildren.However, similar to the previous popular anti-corruption TV series The People's Name, Lai had secretly divorced his ex-wife, but did not report to the organization. Instead, he made another arrangement in Hong Kong and had twin young children.Lai Xiaomin often travels to and from Hong Kong due to work reasons, and often disappears for half a day. People around him also have a tacit understanding and will not rush to disturb because of work during this period.

In the second half of 2017, a small episode happened.Zhou Daoxu, the former chairman of Huarong Trust, wrote a long letter to a leader who was the deputy prime minister at the time in order to seek a personal career.Anticipating that the letter would be passed on to Guo Shuqing, Chairman of the China Banking Regulatory Commission, Guo Shuqing had a serious talk with Lai and planned to launch on-site inspections and other regulatory measures.After Lai Xiaomin returned to Huarong, he was reprimanded by the meeting, and Zhou Dao was removed from the post of chairman of Huarong Trust, and he was fined to stay in the Strategic Research Department to write reports.Since then, Lai has been deeply disturbed, and his actions of mobilizing and arranging capital projects within Huarong have become more frequent.Huarong is an institution under the supervision of the China Banking Regulatory Commission.Lai Xiaomin also worked, trying to break away from the China Banking Regulatory Commission and change it to be under the Ministry of Finance, or to transfer to another financial institution as the head of his own ideas, but failed.

Surprisingly courageous and successful, but with limited financial expertise, he is a very controversial person.From the China Banking Regulatory Commission to Huarong, such descriptions and evaluations of Lai Xiaomin are quite common.In his hands, Huarong, which was originally under ICBC and had a relatively cautious and conservative style, began to become radical and bold. First of all, Lai Xiaomin was eclectic in employing people and had a tough style. He hired a group of young people born in the 1980s.Deployment and promotion, frequent substitutions, all depend on Lai Xiaomin's personal will.Although the inside and outside of Huarong were a little surprised at the speed of the investigation and punishment of Lai Xiaomin, overall there was no sense of surprise.

After the former president of Huarong resigned due to illness, Lai Xiaomin originally wanted to restore Wang Lihua, the vice president, but failed after seven or eight months, and the position of president has been vacant until now.According to the Caixin reporter, Huarong has recently been notified internally to freeze all personnel relations.

All signs indicate that Lai Xiaomin's investigation has entered a countdown.

Ⅱ. Huarong Turns

Huarong is one of the four asset management companies (AMC) established by the State Council in 1999 to dispose of huge non-performing assets of state-owned banks. It was originally affiliated to ICBC and has the largest asset scale.

According to the original concept, the duration of the four major AMCs is 10 years, and they should withdraw from the stage of history after disposing of non-performing assets.In January 2009, Lai Xiaomin came to China Huarong as the president, which coincided with the end of the 10-year duration.In an interview with the media, Lai Xiaomin once recounted his transfer to China Huarong, saying that he was the director of the general office of the China Banking Regulatory Commission, who was thriving, and he did not want to go to this down-and-out and marginalized enterprise.But since it comes, it will be settled, and it will be done.Since then, several major AMCs have been recognized by high-level officials and transformed into financial holding platforms.

Like the other three state-owned AMCs, China Huarong began to take a diversified development route, and took the opportunity of helping the central bank clean up the Delong assets in 2005, and collected all the licenses of the financial industry.Began to transform into a financial holding company.In October 2015, Huarong was successfully listed in Hong Kong with the code 2799.HK.

In September 2012, Lai Xiaomin was promoted toHuarong's chairman and party secretary became top leaders.That is, from this year, Huarong began to expand rapidly overseas.From the book view, Huarong is very profitable.According to the 2017 annual report, as of the end of 2017, the group's total assets were 1.87 trillion yuan, a year-on-year increase of 32.5%; net assets were 182.6 billion yuan, a year-on-year increase of 21.7%.The annual net profit was 26.6 billion yuan, a year-on-year increase of 15.1%.

What has grown more rapidly than the scale of assets and profits is China Huarong's overseas bond issuance.With the advantage of full financial licenses and the status of a large state-owned enterprise, China Huarong has issued a large number of bonds overseas on the one hand, and the cost of raising funds is relatively low, basically around 4.3%.In 2017, the total amount of bonds and notes payable by China Huarong was 331.963 billion yuan, a year-on-year increase of 36.57%. Among them, Huarong International issued US dollar medium-term notes of US$6.47 billion, SGD 1 billion, and targeted debt financing instruments of RMB 3 billion.

On the other hand, Huarong began to intervene in a large number of investment business and quasi-credit business, lending funds to the outside world, and a large amount of funds entered real estate and the stock market.In order to carry out investment business in China, China Huarong established a large number of limited partnerships through its subsidiaries.Using Huarong and limited partnership as keywords to search Tianyancha, more than 1,300 companies appeared.Before strict financial supervision, such limited partnerships provided financing to industrial and commercial enterprises by building structured products and nesting them layer by layer.Nominally, limited partnerships participate in the equity investment of enterprises in the form of private placement, but many transactions are actually lending businesses with open shares and real debt.A large amount of capital has flowed into the real estate industry and the secondary market, including participating in transactions such as land acquisition, development and construction, shell buying and selling of real estate companies.

In this regard, Lai Xiaomin was praised as breaking AMC's long-standing stereotypes, ignoring the barriers of supervision, and finding a blue ocean for Huarong's asset management management other than non-performing assets.With the opening of Huarong's overseas financing and investment situation, Lai Xiaomin has also become a key person that various private enterprises and businessmen are eager to get acquainted with and obtain resources.

In the file of the former Vice Minister of Finance Wang Baoan, who was sacked a while ago, there is such a detail: In order for his company to enter the list of strategic investors of the central enterprise Huarong, a Beijing businessman asked the then Deputy Minister of Finance Wang Baoan to introduce him.Chairman of Huarong Corporation.Under the recommendation of Wang Baoan, the businessman met the chairman of Huarong Company as he wished.After that, Wang Baoan received a pair of platinum-rimmed glasses worth 100,000 Hong Kong dollars, 100,000 yuan in cash, and 20,000 yuan in "incense money" from the businessman.

Why did Lai Xiaomin become the God of Wealth that everyone wants to worship, and who is the beneficiary of Huarong's blood transfusion?This time Lai Xiaomin was investigated, what kind of case was involved, what company and businessman were involved?

Ⅲ. The fierceness of Tianyuan Manganese

According to the Caixin reporter, the investigation of Lai Xiaomin is related to Tianyuan Manganese, a private enterprise supported by Huarong in recent years.

Tianyuan Manganese is positioned by China Huarong as the number one major customer under the major customer strategy.In July 2017, Lai Xiaomin led a group of executives including the then president Ke Kasheng and vice president Wang Lihua to visit Tianyuan Manganese, and even scheduled Huarong's semi-annual work conference to be held in this company.It was also reported by local media in Ningxia.At the meeting, Lai Xiaomin asked Huarong to fully support Tianyuan Manganese. Four months later, Wang Lihua led a group to go there again.What kind of company is this?

Tianyuan Manganese Industry is a company mainly engaged in electrolytic manganese in Zhongning, Ningxia. It was established in 2003 with a registered capital of 30 billion yuan and is controlled by Jia Tianjiang, a private owner.In 2012, the national manganese metal industry encountered a cold winter. When dozens of similar enterprises closed down one after another, Tianyuan Manganese Industry bucked the trend and became the world's largest electrolytic manganese metal production enterprise.However, Tianyuan Manganese does not go public, does not issue bonds, and has very little public information, and Huarong is the most important provider of financial resources for Tianyuan Manganese.

According to people familiar with the matter, electrolytic manganese is only the facade of Tianyuan Manganese Industry. The main body behind it is China Tianyuan Financial Group (Holdings) Co., Ltd., and Huarong is the real financial owner. It can also be said that Tianyuan Manganese Industry is a shadow company of Huarong.Huarong provided funds to Tianyuan Manganese Industry through various methods, and Tianyuan Manganese Industry developed and operated it to help cover up the holes in the Huarong project, and also realized the benefit transfer and arrangement that Lai Xiaomin needed.Among them is the Zhonghong share restructuring case.

Zhonghong Co., Ltd. was established in 2001, mainly engaged in real estate. In 2010, it went public through *ST Keyuan backdoor.Wang Yonghong, the actual controller of Zhonghong shares, was born in 1972 and is a fellow of Jiangxi with Lai Xiaomin.However, in recent years, Wang Yonghong has continuously defaulted on his bonds, which is at stake. Huarong also has billions of yuan in exposure to Zhonghong shares, and there is no collateral.On March 19, Zhonghong Zhuoye Group Co., Ltd., Wang Yonghong, the controlling shareholder of Zhonghong shares, and Shenzhen Gangqiao Equity Investment Fund Management Co., Ltd. (hereinafter referred to as Shenzhen Gangqiao) signed a strategic restructuring agreement. Shenzhen Gangqiao intends to cooperate with other major partners, initiated the establishment of a private equity investment fund, raising no more than 20 billion yuan of funds for the restructuring of Zhonghong Group, and the duration of the fund is three years.

The leading party of the fund, Shenzhen Port Bridge, is a wholly-owned subsidiary of Hong Kong-listed company China Port Bridge (2323.HK, formerly known as Zhi Zhuo International), and China Port Bridge is inextricably linked with Tianyuan Manganese and China Huarongconnect.According to public information, Tianyuan Manganese Industry holds 16.39% of the shares of China Hong Kong Bridge through its wholly-owned subsidiary China Tianyuan Manganese Industry Co., Ltd.(993.HK), Huarong Investment (2277.HK) 6.46%, 4.85% of the shares.

Huarong used various resources to transfuse Tianyuan Manganese, and adopted relatively covert methods, including establishing funds and companies in cooperation with companies under Tianyuan Manganese and Tianyuan Financial.For example, on May 14, 2017, Huarong Financial Holdings announced that its two subsidiaries would form a joint venture with a subsidiary of China Harbor Bridge to establish two funds, each with a size of HK$1 billion, of which Huarong Financial Holdings would contribute 78%, China Harbor Bridge invested 22%.Huarong Financial Holdings stated that it will provide the funds required for the fund injection through internal resources.

In the second half of 2017, China Huarong arranged a dozen branches and subsidiaries to make a structured financing with a total scale of more than 20 billion yuan for Tianyuan Manganese Industry. Huarong subscribed for the inferior grades and invested more than 100 millionbillion.This business was quite a sensation within Huarong. Tianyuan Manganese had neither mortgage nor guarantee. The loan was not handled in accordance with the rules and regulations, and it exceeded the authority of several branches, according to people familiar with the matter.

The companies and funds jointly established by China Huarong and Tianyuan Manganese also include Huarong West Development Investment Co., Ltd. (hereinafter referred to as Huarong West), Huarong Tianyuan (Ningxia) Industrial Fund, etc.Among them, Huarong West is the 13th holding subsidiary of China Huarong. It was established in December 2014 with an initial registered capital of 400 million yuan. It increased its capital to 900 million yuan in December 2017. China Huarong and Tianyuan Manganese respectivelyHolding 60%, 40%.Liu Yanfeng, the legal person of Huarong Western Investment, once served as the deputy general manager of Yinchuan Sales Department of Huarong Lanzhou Office.

On September 16, 2017, Tianyuan Manganese Industry also cooperated with some enterprises in Ningxia to establish the Ningxia Strategic Emerging Industry Development Investment Fund with a total scale of 12.2 billion yuan.Among them, commercial banks contributed 9 billion yuan as the priority limited partnership, Huarong West, Hengtong Group, and Ningxia Tianyuan Manganese Industry contributed 2 billion yuan as the inferior level, and Ningxia State Investment Group contributed 1 billion yuan as the intermediate level.The fund adopts the model of dual GPs and dual managers.On the same day, Huarong Securities also registered and established Huarong Tianyuan Industry and Finance Fund, Business Income Investment Fund, and Strategic Emerging Industry Fund in Yinchuan, Ningxia, with a total scale of 46 billion yuan.

On September 8, 2015, Tianyuan Manganese signed a strategic cooperation agreement with three Hong Kong companies—Behringer International Holdings, Hong Kong Jingjin International Holdings Group Co., Ltd., and TEDA International in Ningxia.China Huarong holds a 9.35% stake in Behringer.

Feel dazzled?However, the facts all point to one thing. Under the will of the head of the state-owned financial group, Lai Xiaomin, Huarong has imported tens of billions of financial resources into an unknown private enterprise. What is the mystery of this?As Lai Xiaomin is investigated and dealt with, the answer should gradually emerge.■

Author: Dong Jing (Liu Caiping and Jiang Fei also contributed to this article)

Lai Xiaomin's case has repeatedly refreshed the bottom line of people's cognition; how can Huarong get rid of Lai Xiaomin's shadow and poison, and truly move towards a clear new Huarong?

Three months after the incident, Huarong was still in the whirlpool of the Lai Xiaomin case.AlthoughWe are in the process of vigorous self-examination, self-correction, and writing reports, but Huarong is still not confident in eliminating Lai Xiaomin's poison.For example, relevant personnel adjustments have just begun, and are far from being in place; and the disposal of risky assets also needs to be further advanced.

From August 3rd to 4th, from Friday to Saturday, Huarong Group held a full two-day 2018 mid-year work conference in Beijing, only the principals of all branches and subsidiaries participated.During the meeting, part of the case of Lai Xiaomin, the former chairman of Huarong, was notified at the meeting.

According to Caixin reporter’s knowledge, not long ago, Li Xinran, the head of the discipline inspection team of the China Banking and Insurance Regulatory Commission, informed some directors of the banking supervision system about the situation of Lai Xiaomin’s case.

Lai Xiaomin, who was dismissed on April 17, 2018, is also known as the 417 case.Before and after the incident, Caixin reporters have investigated the context and clues of Lai Xiaomin's case in many ways. The information revealed in these recent meetings has revealed the tip of the iceberg of the case, which is also shocking enough.Based on this, the Caixin reporter sorted out some of Lai's case and the dangers.

How did this largest financial corruption case since the founding of the People's Republic of China come about?How can Huarong's long-standing malpractice be uprooted, and a clean Xinhuarong be restored to the market?This is still a major doubt lingering inside and outside Huarong.

I. 270 million in private cash

Whether it is Huarong's mid-year meeting or the relevant meetings of the China Banking and Insurance Regulatory Commission, they all disclosed an important detail in the investigation and handling of the Lai Xiaomin case, that is, after the Lai Xiaomin case was discovered, the investigators found cash in domestic and foreign currencies in several Lai Xiaomin residences in Beijing.A total of 270 million yuan is equivalent to RMB.

According to online inquiries, if it is a new banknote that has just been released from the warehouse, a 100-yuan banknote weighs about 1.15 grams, a 10,000-yuan banknote weighs about 115 grams; a 100-million-yuan banknote weighs about 1,150 kilograms, and its volume is 1.19 cubic meters.270 million yuan, weighing about 3105 kilograms, which is more than 3 tons.In the anti-corruption TV series In the Name of the People, the scene of piles of cash behind the curtain and under the bed in the villa of corrupt officials was actually reproduced in the case of Lai Xiaomin.

This amount also set a new record in April 2014 when Wei Pengyuan, former deputy director of the Coal Department of the Energy Bureau, was found at home after being investigated for 230 million yuan in cash.

This is only the cash part of Lai Xiaomin's corruption case, which can be described as the tip of the iceberg.However, other stolen money may have the opportunity to recover or make up for it during the investigation of the case; therefore, the final amount of the case needs to be determined by the judiciary.

Where did the huge amount of corruption funds in the Lai Xiaomin case come from?According to interviews with Caixin reporters, the sources are as follows:

One is to accept the entrustment of private enterprises and transfer the benefits of the project.Under Lai Xiaomin's instruction, many of Huarong's non-financial subsidiaries have become the hardest hit areas for profit transfer and crimes through complex equity structure arrangements and nesting;

The second is the corruption from Huarong's own engineering projects, at least no less than 1 billion yuan;

The third is from Huarong's internal buying and selling of officials, and the amount is unknown.A Huarong insider was originally thought to have an ambiguous relationship with Lai Xiaomin, but this person semi-publicly stated within Huarong that the position was bought for 1 million yuan.

300,000 yuan into Huarong, 500,000 yuan for a part-time official, and 1 million yuan for the head of a branch company... Such unspoken rules with clearly marked prices were relayed by insiders close to Huarong, which shocked outsiders. This is still under party discipline and state lawState-owned financial enterprise group?

II. Two-faced and three-faced people

In recent days, there has been more colorful information about Lai Xiaomin's case.The relevant notification materials call Lai Xiaomin a double-faced and three-faced person.However, most of the listeners don't understand what a three-faced person is, and this will be clarified after the case becomes clearer in the future; but the situation of Lai Xiaomin's case has repeatedly refreshed people's cognitive standards.

The so-called double-faced refers to Lai Xiaomin's previous deception.Therefore, Huarong analyzed Lai Xiaomin's inconsistency in words and deeds in Huarong and the nature of power-money transactions from the aspects of discourse system and behavior, in order to trigger deep internal reflection and introspection.

In terms of the discourse system, Lai Xiaomin often takes the central principles and policies out of context, steals the truth, and uses a set of so-called ideas and quotations to package himself as a business leader.In the quotations that he assigns a special person to write, requires the entire Huarong Group to subscribe, and has a copy of the quotations, it is full of imitations of the quotations of the party and state leaders and the substitution of concepts, such as the so-called Huarong’s four self-confidences;

In terms of corporate governance, Lai Xiaomin puts his personal will above the organization. On the surface, he is decisive and dares to make a decision, but behind the decisiveness is a clear, blind and arbitrary decision-making, which has caused Huarong's family-style management to suffer from many problems.For example, under the pretext of being famous for the Belt and Road Initiative, Huarong's branches and subsidiaries are required to provide funds for Tianyuan Manganese Industry's violations, and engage in profit transfer.

In business work, Lai Xiaomin advertised himself as the chief marketing officer and never dealt with private companies, but he also made it a public slogan that supporting Tianyuan Manganese is to support the real economy.Some non-financial companies seek personal gain, leaving Huarong with huge risks and hidden dangers.

Prior to this, Caixin had reported the scandal of Huarong's blood transfusion into Tianyuan Manganese and Tianyuan Financial for the first time.

Current data shows that Huarong has transfused tens of billions of funds into Tianyuan Manganese through various means such as funds and loans, which is far from the on-balance-sheet loans of more than 6 billion announced by Tianyuan Manganese.

Lai Xiaomin regards the radical behavior that violates the laws of the market as an unconventional leapfrog development, covering up many problems in the company's operation and management, and fooling and deceiving Huarong's employees; he strengthened the reverse incentive mechanism within Huarong, and talked about heroes based on profits.risk, when a problem arises, they call for a group to warm up internally, replace the old with the new, cover up the risk, and say that future generations have better solutions than us.Assets, for example.

Lai Xiaomin once proposed that if Huarong does not publish a case, it will not bring down one person. The essence is to deliberately interfere with the supervision of the Commission for Discipline Inspection, to find excuses for him to cover up problems and violations of law and discipline by a small number of people, and even to mobilize the platform for endorsement by the reported object, resulting in dozens of cases.Since the Eighth National Congress of the Communist Party of China, there have been more than 400 letters and visits that have not been traced

All of the above are part of the contents of Huarong’s internal notification.According to the Caixin reporter, in recent years, there have been a lot of reports about Lai Xiaomin, and the regulatory authorities have not investigated and dealt with them for a long time.Shouldn't this also be a good reflection and self-examination?A professional close to Huarong questioned this.

III.630 What to do after midterm report?

At present, Huarong’s urgent need is how to publish the interim report as of June 30, 2018 after the Lai Xiaomin case exposed many major risks, whether it can pass the auditor’s approval, and how to truly move towards Xinhuarong with ease.?

It is expected that Huarong's interim report performance will decline sharply, because the decline in revenue, the increase in interest expenses, and the increase in provisions are almost certain.However, the good news from the industry is that under the new asset management regulations and the policy environment of de-leveraging in the first half of the year, the financial asset management industry as a whole is undergoing downward adjustment, and the income and profitability are not the same as in previous years, and the performance has declinedIt has become an inevitable result. Huarong's profit of more than 16 billion yuan in the middle of last year is absolutely impossible to reproduce, but fortunately, the profitability of several other asset management companies is not much better.

Wang Zhanfeng, the current chairman of Huarong, who was appointed in a crisis, proposed the goal of Xinhuarong at the mid-year meeting, which brought a glimmer of hope to the low morale of Huarong.For this reason, Huarong has formulated a three-year slimming and asset revitalization plan to speed up the clean-up and launch of non-main business and non-advantageous businesses, and strive to achieve a reduction of about 50% of the asset scale within three years, so as to reduce the overall leverage level of the group.However, referring to the data of previous years, for Huarong, whose original asset size was growing at an annual rate of 30%, this slimming goal is not radical.

In the face of liquidity risk, sustainable development of business model, release of accumulated risk, reshaping of group management and control capabilities, market value management and many other goals, Huarong is indeed facing huge challenges.

However, Huarong is not completely without opportunities.Huarong's book profit at the end of 2017 was 26.59 billion yuan, with a provision of 30 billion yuan.According to analysis by insiders in the industry, Huarong's liquidity should be safe, and there is at least about 70 billion yuan in reserves on the account.

Moreover, Huarong still has the golden signboard of the state-owned financial group, and the US$1.1 billion bond in June was also oversubscribed by the market.

The current key lies in how to preserve and recover the bad assets caused by Lai Xiaomin, and make a proper asset restructuring plan. While clarifying the relationship between creditors and debts and the relevant responsible persons, shrink the non-advantageous business and overseas general business, so that HuarongReally return to the disposal of non-performing assets and become the main business of Chinese-style vulture funds; you can also consider continuing to explore in the direction of new large asset management.

Several professionals who care about Huarong's future have suggested that Huarong should stop the bleeding as soon as possible, try to take a big bath, deal with existing risky and hidden assets, and truly eliminate Lai Xiaomin's persecution, so that those who use improper means to seek seats will stand aside and let the manufacturingBad people should go to clean up bad ones; clean up non-financial subsidiaries and overseas subsidiaries, strengthen risk management and control; start the introduction of sovereign wealth fund capital injection as soon as possible, and win the support of relevant departments for Huarong's return to A shares, issuance of preferred shares and secondary capital bonds, etc.Replenish capital through multiple channels; let employees with real professional ability and integrity regain confidence, be able to do business wholeheartedly, and rebuild New Huarong.■

Authors: Xia Guobei, Dong Jing, Wu Hongyuran