Zhejiang China Group (hereinafter referred to as “China Group”) bogged down in a critical situation, the local government-led relief operation has not stopped the moment.

China cited the collapse of the textile industry danger

“Provisional Government of China to the Group of 158,000,000 yuan of funds to protect the production line will not stop, the group’s China operations and finance, the Government has been involved in monitoring.” Dec. 11, a creditor bank-related head office said.

“In government organizations, banks need to act, the current (loan) do not have to withdraw from.” Creditor banks of the above said, “and we can do is to preserve assets, and risks.”

China around the group more than 40 billion credit in recent years, the composition and cross-industry, the regional capital, as well as the funds accumulated in the process chain risk, our reporter to investigate.

Super 4,000,000,000 constitute credit

All along the banks of the Group and China have maintained good cooperative relations.

“We have vertical and horizontal with the group lending, is not only developed in recent years, but have more than a decade of the credit relationship between the various local big brokerages are similar to 2,000,000 from such loans to start small-scale, and constantly expand . “Dec. 11, related to a large bank said.

This statement is true. In the past three years, a number of commercial banks is still on the increase in China’s credit group. One of the creditor banks to informed sources, giving credit to add vertical and horizontal group of major banks, including Minsheng Bank (4.24, -0.20, -4.50%), a total of two, the Hangzhou branch of 330,000,000 yuan, head 350,000,000 yuan; Industrial and Commercial Bank (3.82, -0.15, -3.78%) 250,000,000 yuan; Construction Bank (4.19, -0.18, -4.12%) 230,000,000 yuan; Guangdong Development Bank Hangzhou Branch of 240,000,000 yuan; Hengfeng Bank, Bank of Shanghai were 150,000,000 yuan, 0.9 billion yuan, a total of 1,640,000,000 yuan.

As of October 2008, about 15 Bank of China Group Bank loans, including workers, farmers, construction, cross-5, and other large banks, Shanghai Pudong Development Bank (13.88, -0.98, -6.59%), Minsheng Bank , Industrial Bank (15.84, -1.04, -6.16%), Huaxia Bank (8.08, -0.60, -6.91%) and deep development, Guangdong Development Bank, Prudential Bank, 7 joint-stock banks, Bank of Shanghai, Shaoxing, such as commercial banks 2 firms to the city, there is a rural cooperative financial institutions – the town of Doumen rural credit cooperatives.

“China Group is a high-quality original customer, Hence, more than a normal bank account.” Zhejiang bankers frankly.

In all creditor banks, the top of the scale of loans for the Bank of China (3.16, -0.09, -2.77%) and Minsheng Bank. The aforementioned creditor banks to informed sources, as of October this year, the Bank of China Group, China’s head office loan balance was 15.7 billion yuan, the Bank of China Group at the opening of a branch of Shaoxing 28,000,000 U.S. dollars of letters of credit.

The Minsheng Bank of China Group, two of a total of 680,000,000 yuan credit, China is currently the Group of adequate credit to the basic form of loans reached more than 600,000,000 yuan.

Has all the data from the 12 creditor banks, the total loan exposure of about 3.7 billion, the availability of loans that have not yet expired.

The China Construction Bank Group branches in Shaoxing, Hangzhou Branch of the Industrial Bank and Shanghai Pudong Development Bank branches were related to the formation of about 600 million, 70,000,000 yuan and 1,000 yuan notes of the exposure, for a total of more than 86,000,000 yuan. The group also Shaoxing Branch of the Bank of China, Shaoxing Branch of the Construction Bank, Industrial Bank opened a branch in Hangzhou of 28,000,000 U.S. dollars, 27,000,000 U.S. dollars, 10,000,000 U.S. dollars of letters of credit, for a total of 65,000,000 U.S. dollars, approximately 420,000,000 yuan.

According to informed sources, Shaoxing Branch of the Construction Bank to the Group of China has provided guarantees on the 100,000,000 yuan. This shows that the vertical and horizontal groups in the formation of the 15 banks in the form of credit and balance-sheet business, the scale should be more than 4,000,000,000 yuan.

During the investigation, a number of commercial banks related to the above data indicated that the basic loan approved.

“We are involved in bank loans on a small scale, and before there is collateral, in recent years has been strengthening security.” Related to the aforementioned big brokerages said. However, he frankly admitted that, “As the economic situation in all of a sudden change in the current back to back will certainly not come out.”

Suffer long-term equity investment

Meanwhile, bankers are so many disappointing is that the vertical and horizontal group is as if overnight, “pale.”

“So severe domestic and international situation, together with changes in a short period of time and change, a lot of impact on businesses. Chinese private enterprises to achieve an early age, met for the first time such a test. Therefore, private enterprises exposed to a lot of questions to the bank Lessons. “Related to the aforementioned big brokerages are frankly.

Private financing of a sudden change in the environment, a large number of long-term equity investment of the assets of the erosion of liquidity, as well as the main cash flow shortage, China fired into groups of three capital chain, “Li Jian.”

Zhejiang, said the banking sector, non-governmental loans may not be reflected in the balance sheet, and the Martial Law by holding, Hualian Sanxin impact of non-lending, borrowing social difficulties, “we do not want to lend money to China Group, and ahead of schedule To demand the repayment of the pressure started to increase. ”

According to informed sources mentioned above, in recent years, the bank credit funds of the indirect support of the Group of China has also carried out a large number of cross-industry, cross-regional investment, mainly involved in the field of four.

First, the steel industry, investment 600,000,000 yuan to form vertical and horizontal Handan Iron and Steel Group Co., Ltd., holding about 40% of the shares. Second, real estate, in Chengdu, Kunshan, Zhenjiang, Wuhan and other places to invest in real estate projects amounted to a total of 820,000,000 yuan. Third, the investment firm City 5, holding a total of 500,000,000 shares, investment in the amount of 745,000,000 yuan. Fourth, into the water and electricity, Enshi in Hubei Province along the river crossing steps of the plant, the Group holds 51% of the vertical and horizontal equity.

Enshi in Hubei Province from the local media of public information display, “From the beginning of 2006, Badong County, the introduction of China Merchants Group, China’s Zhejiang Province to invest more than 300,000,000 yuan in the valley to cross the river along a new thread Ping power station installed capacity of 30,000 kilowatts of a square cut Hydropower has been put into operation early in May 2007 generation, this generation will be more than 80,000,000 kwh. Now, the group decided to invest 1.1 billion, to cross the river valley along the five-level implementation of the cascade development. ” As a result, the Group of China in Badong County, spent more than 1.4 billion.

The four major areas of investment China absorbs nearly 4.8 billion group of funds, which go along with more than 4,000,000,000 yuan coincide with the size of the credit, only a Tengnue in China in order to sort out their own group. The number of long-term equity investments, China can not wait until the group has to bear fruit.

“In addition to the (July 2005) China’s Handan Iron and Steel through equity transfer, returning some of the cash and the rest were not long-term equity investment to form the current cash flow (back).” Informed sources in the above-mentioned.

The consequence is that, on the one hand, China will get the funds to carry out long-term investment, the main impact on cash flow; On the other hand, some of their investments shrink, the most obvious is that house prices fell, leading to its Investment in real estate part of the assets value.

All the problems had considered quitting, while long-term investment “can never quench the thirst”, in the third quarter, China’s main trade group suffered heavy losses.

According to informed sources mentioned above, the international financial market turbulence, particularly in the third quarter, the spinning industry, the main raw material PTA prices fell more than 50% of the Group of China to one of the main spinning a significant impact, resulting in insufficient cash flow . Its mechanism for that with oil prices down, the main aspect of the Group of finished goods prices also fell, and the lower reaches of the reduced demand; Group in China and oil prices are still high when the reserves of raw materials, raw materials and production Prices of finished upside down.

The realization of letters of credit, “got burnt from playing fire,”

If the aforementioned Li Jian made three vertical and horizontal chain of the Group of funds has been strained, then breaks the camel’s last straw is the bank’s “weaning” move.

“Weaning” for the performance of a state-owned big brokerages slight decrease of the domestic letter of credit balance of 120,000,000 yuan, while the vertical and horizontal lines of the original promise to give working capital loans of the Group accordingly, have not yet been materialized at the last minute, resulting in vertical and horizontal chain of the Group of funds even more tense.

Why is domestic credit balance with a slight decrease so much destruction? This aspect of the Group from the frequent use of letters of credit Speaking of cash funds.

When the Group of China to sustain cash flow, Hui Yuan Bo, chairman of Break the beginning of the letter of credit to maintain cash and ease the company’s “blood circulation.”

Local bankers, in general, it is necessary to obtain an international letter of credit, companies need to apply to the issuing bank to pay 10-15 percent margin, which was the remaining 85-90 percent of the capital, and the letter of credit period General in 3 months or so.

China is the use of the Group of the lapse of time to Tengnue funds.

Its principle of operation is simple. Chinese group to get letters of credit, to suppliers of raw materials, vertical and horizontal access to bills of lading, ship suppliers. The goods referred to as the use of raw materials, natural nothing wrong. But if China does not need so many raw materials, some of the goods sold, and get the funds to complete the realization of action.

In order to maximize the use of this tool, in addition to the use of vertical and horizontal group of international letters of credit, it is also used in the past two years the banking industry’s credit innovation – the letter of credit, letters of credit and domestic bond ratio is as high as 20% . However, the prerequisite for the realization of Transportation letter of credit is constantly expanding the size of letters of credit.

However, with the impact of the deepening economic crisis, chemical fiber industry the situation is getting worse, a three-month period for China, is “far hardly solve the immediate problems.”

With the production of finished products continue to decline, the assets continue to shrink, along with a state-owned big brokerages aspect of the Group of credit “drastic measure”, Ren-Yuan Bai cashed in letters of credit of Kabuki can not continue to maintain.

Local bankers said that as the final Hui Yuan Bo does not cash in on the letter of credit funds, the last bank had no choice but to advance to be paid in the form of money.

In fact, the vertical and horizontal group of cases showed that “the quality of private operators, management ability, as well as the external macro-economic environment, there are two problems, over the years, these problems have been accumulated.” Big brokerages are the aforementioned respect, but ” Economic up-cycle, we do not see these deep-seated contradictions and not alert, not from a bank, which is now bogged down. ”

December 10, the China Banking Regulatory Commission Chairman Liu Mingkang said that, from our national conditions, adhere to specific issues, specific analysis of specific disposal; to “increase security and development, anti-risk” as the main line, and further deepen the reform and opening up, improve Financial services, guard against and defuse financial risks, according to “maintain pressure, differential treatment” principle to guide the banking industry, “emergency” and “alleviate poverty” and “chaotic rescue”; firm limit on the “high” industry, industry overcapacity , Low-grade corporate loans, to prevent low-level redundant construction.

“China as the Group of such enterprises, a large shop stalls in the economy down when it increased the risk of capital chain break, the banks certainly have to be careful in the future.” Frankly these are big brokerages.