Former Bridgewater, UBS analyst who called Chinese bank turmoil says US$2.9 trillion trust industry is next
- Jason Bedford says most Chinese trust firms are ‘deeply distressed, potentially with their capital solvency at risk’
- Missed payments from Zhongrong International sparked protests earlier this year, while the industry saw its first bankruptcy in May when New China Trust folded
The analyst who predicted the troubles that cascaded through China’s regional banks four years ago now has similar warning for the nation’s US$2.9 trillion trust industry.
Many of these firms are “deeply distressed, potentially with their capital solvency at risk”, said Jason Bedford, a former analyst with Bridgewater Associates and UBS Group.
Bedford made his name by issuing early warnings about troubles roiling China’s smaller banks after combing through nearly 250 financial statements. He has now done the same for China’s trust firms, a corner of the country’s shadow banking sector that can offer returns several times that of a bank deposit.
Of the 55 trust companies that issued financial statements for 2022, 14 reported non-performing and special mention assets that topped one third of their total assets, according to Bedford’s calculations. Many of the 13 firms that did not report could also be in trouble, he said.
The National Administration of Financial Regulation, which oversees trust firms, did not respond to a request for a comment.