http://www.scmp.com/print/business/companies/article/1737083/ping-unit-put-disclosure-blacklist

Ping An unit put on disclosure ‘blacklist’

Saturday, 14 March, 2015, 6:00am

Bloomberg in Beijing

Rating agency says Lufax.com failed to disclose debtor information

An online peer-to-peer finance platform owned by mainland China’s second-largest insurer has been put on a “blacklist” by a rating company, which cited reasons including failure to disclose debtor information.Lufax.com [1] run by a unit of Ping An Insurance, is suspected of “building an enormous credit platform” and “adding uncertainties to the internet finance market,” Dagong Global Credit Rating said in an e-mailed statement late on Thursday. The 354 companies on the blacklist have significant credit risks, Xu Zhipeng, president of Dagong’s data arm, said through a spokesman. It is very risky to invest using such companies, he added. A Lufax spokeswoman declined to comment when contacted by phone.

Peer-to-peer internet lending, which Shanghai-based Yingcan Group estimates ballooned almost 300 per cent to US$17 billion last year, is the latest entrant to a shadow banking industry that has driven total debt in China to almost three times gross domestic product. The websites offer investors better returns than they can get at commercial lenders, averaging 15 per cent in February versus the People’s Bank of China’s benchmark deposit rate of 2.5 per cent, says Yingcan.

“China’s P2P industry is a mess,” Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, said by phone. “Many online P2P companies are swamped by bad debt. Sometimes they offer fake investment projects to lure capital and they tend to hide information that needs to be disclosed.”

Lufax, one of about 1,400 loan platforms that have emerged in China, does not disclose who it gets funds from and where the money goes for two out of three loan product lines, Dagong said. Contributions from shareholders fell to 80 million yuan (HK$100.7 million) from 400 million yuan earlier, it added, without giving a specific timeframe or identifying the shareholders.

PBOC governor Zhou Xiaochuan said at a press conference on Thursday that peer-to-peer platforms should not be considered banks or credit cooperatives because they have not applied for or received banking licenses.