China’s P2P lending crisis worsens as second firm runs into trouble in a week
- Xinhehui says it will not be able to repay investors a total of US$330 million
- China’s intensified online lending crackdown is expected to slash number of lenders to 300 at the end of 2019
Mainland China’s peer-to-peer (P2P) lending crisis showed no signs of abating after another big platform said it would not be able to repay investors 860 million yuan (US$125.4 million) when the debts expire this weekend.
Xinhehui, a Hangzhou-based P2P operator which has conducted online lending businesses worth more than 210 billion yuan, has vowed to work out a new restructuring plan to resolve the issue, but thousands of affected investors were unconvinced and disappointed with how the company has managed their assets.
“We want the company to show us the details of their operations and the bad-loan data,” said Wei Xue, one of the 17,000 victims of the default. “The management does not seem to have a right attitude towards the crisis.”
Xinhehui held a meeting with representatives of the 17,000 investors on Wednesday to inform them of the potential default, and proposed a debt-for-equity swapping plan which they rejected, according to two investors who attended the session.
Investors were also unlikely to receive payment for another 1.4 billion yuan of debts that will expire on May 6, according to the attendees.
Calls to Xinhehui and its owner Chen Hangsheng were unanswered on Friday, but the company said in a brief statement on its WeChat account that the money would eventually be paid back without giving a time frame or if the full principal would be repaid.