A Case Study On The Default Of X Product Of A Trust Company

In recent years,China's economy has entered into a new normal situation,with economic development slowing down and financial risks becoming prominent.Due to the lack of unified supervision,there have been many phenomena such as Banks' capital violation,trust institutions deviating from the main business to play the role of shadow banking,and trust institutions' illegal channel business,leading to a large number of defaults in the products cooperated with trust companies in the past two years.Due to the huge capital volume of trust products,once the "thunder" phenomenon appears,it will not only pose a threat to the majority of investors' principal,but also increase the risk exposure of trust companies and commercial Banks,which will bring great threat and instability to China's financial industry and the overall economic environment,and harm the healthy development of China's economy.In March 2019,the X product jointly issued by A trust company and bank C was materially in default,with the default amount as high as 720 million yuan,which attracted extensive attention from the society.Since this is the first trust default event of transaction management in A trust company in recent years,this event has a certain representativeness and typicality,so this paper chooses this default event as the case study object.Firstly,this paper reviews the status quo of trust industry default and the existing trust default literature,and makes a detailed introduction to the relevant information and default process of Xproduct in the case.Secondly,by analyzing the parties involved in subject research,A trust company did not do due diligence,B company unreasonable capital structure and debt default,C bank decision-making intervention by major shareholders,severe G group debt burden and external guarantees poor too much,the boom of construction industry and the concrete price volatility,rating agency lack of objectivity is the cause of default product X;Thirdly,this paper makes a detailed analysis of the impact of the default event on the participants of all parties.It is believed that the default of product X basically has a significant negative impact on the participants of all parties,but it helps to provide new ideas for commercial Banks to carry out bank financing subsidiary business.Finally,based on the impact of default on all product X,this paper argues that can trust business operation process from specification,broadening the trust business development direction,improve the commercial bank risk management system,carefully evaluated financiers credit qualification,discreet choice guarantor,develop financing enterprise sustainable development strategic planning,correct rating,a rating agency,such as,shorten the rating hysteresis direction to improve,in order to reduce the trust product default rate.