China’s top auditor is conducting a review of the $3 trillion trust industry, paving the way for a potential overhaul of a key shadow banking sector where losses on property loans are mounting, reports Bloomberg.
In an unscheduled move, the National Audit Office—which previously led an examination of bank exposures to Jack Ma’s Ant Group—has for the past month been inspecting the books of at least 20 trust firms, including the top five, to gauge the risks they pose to financial stability, according to people familiar with the matter.
The firms are being asked to report on their risky loans to developers and any plans to dispose of them, the people said, asking not to be named as they’re not authorized to speak publicly. The audit office is expected to submit its conclusions to policy makers in Beijing, who may decide on the future reforms of the sector, the people said.
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