SHANGHAI/HONG KONG (Reuters) - China’s biggest manager of bad debts is trying to exit early from at least three loans and investments as it wrestles with a liquidity crunch triggered by an anti-corruption probe into its chairman, people with knowledge of the matter said.
FILE PHOTO: Logos of China Huarong Asset Management Co are seen during a finance expo in Beijing, in this October 30, 2014 file photo. REUTERS/China Daily/File Photo
China Huarong Asset Management (2799.HK), one of four state-backed so-called “bad banks” formed in 1999, has been trying to raise cash since Lai Xiaomin resigned as chairman in April amid a graft probe, the sources said.
Huarong’s attempts to call back loans shows the extent of its liquidity woes. It has already begun divesting equity stakes that were bought as part of a diversification push and has also forced employees to take pay cuts.
Huarong did not respond to calls, emails and faxed requests for comment.
The asset manager is the latest major Chinese company to struggle in the wake of allegations of misconduct by its leader. Others include CEFC China Energy and Anbang Insurance, both of which are now undergoing government restructuring.
The exact nature of the allegations against Lai remain unknown, but sources with knowledge of the matter said the investigation had slowed down operations at China’s largest asset management firm and forced it to be cautious about taking on new business.
When a firm comes under investigation, “it’s possible that the efficiency of business will fall, which leads to a liquidity squeeze,” said Meng Shen, director of Chanson & Co, a boutique investment bank.
Shortly after the investigation became public, Huarong asked one fund to return millions of dollars it invested only a few months earlier, citing
