Fujian International Trust and Investment Corporation (Fitic) was closed in early January, an official from Fujian province told Reuters. The People’s Bank of China has taken over the trust company’s debts and assets and was considering whether to let the firm declare bankruptcy, which would leave payment of creditors in the hands of a court.
The company was due to make a coupon payment on a Y14bn (US$106m) Japanese Samurai bond on January 24. Moody’s Investors Service said that the liquidation of Fitic would result in a modest recovery rate for its foreign creditors and depositors. If the company were to go bankrupt, Fitic would be the second Chinese financial entity to default in the Samurai market after Hainan International Trust and Investment Corporation defaulted in October 2000.
China wants to reduce the number of trusts from a previous total of 238 to sixty.