China Ting (3398 HK) – Net Loss due to Entrusted loans turned sour + Reclassification of equity investment in property asset from investment in associate to available-for-sale financial asset at fair value

26 March 15

(3398) China Ting: China Ting Group Holdings confirmed that its loss before the tax for the year ended 31 December 2014 will increase from previously  estimated HK$193 m to HK$246.9 m due to the following additional factors: (1) An impairment amount of HK$83.5 m is charged on the re-classification of its investment in Zhejiang Haoran Property Company; (2) A pro vision for bad and doubtful debt for HK$17.7 m regarding two entrusted loans of RMB160 m; (3) Increase in the estimated amount of operating profit for the last two months of 2014

20 January 15

CBRC issued draft rules restricting entrusted loans in a bid to curb excessive margin finance. The draft rules said banks shall not bear credit risks if the loan defaults, and lenders shall not issue entrusted loans if the fund is raised for specific uses by the authorities or raised from bank lending. Banks shall not issue entrusted loans using funds raised through debts, raised from other companies or individuals, or other sources that cannot be identified. Entrusted loans is a form of inter-company loan where bank intermediates one company’s lending to another company’s borrowing and collect a fee in the process. Entrusted loans have been used as a margin trading channel that may bring risks to banks as in the past when there was default in lending, it was usually the banks that bore the risks, said market insiders. The draft rules are open to public comment until 16 Feb for sugg estions on amendments

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