BEIJING/SHANGHAI Jan 16 Industrial and
Commercial Bank of China, the world's largest bank by
assets, said on Thursday that it has no plans to use its own
money to repay investors in a troubled off-balance-sheet
investment product that it helped to market.
ICBC's shares have fallen this week amid speculation that
the bank would be forced to help repay investors in a 3 billion
yuan ($496.20 million) high-yield investment product issued by
China Credit Trust Co Ltd but marketed through ICBC branches.
The product is due to mature on Jan. 31.
"Regarding this unsubstantiated rumour, a situation
completely does not exist in which ICBC will assume the main
responsibility (for the trust product)," an ICBC spokesman told
Reuters by phone on Tuesday.
The trust product, called "2010 China Credit / Credit Equals
Gold #1 Collective Trust Product", used the funds it raised from
wealthy investors in 2010 to make a loan to unlisted coal
company Shanxi Zhenfu Energy Group Ltd.
But in May 2012, Zhenfu Energy's vice chairman, Wang Ping
Yan, was arrested for accepting deposits without a banking
Following an investigation, China Credit Trust told
investors that Zhenfu Energy had taken out high-interest
underground loans totaling 2.9 billion yuan, bringing its total
liabilities to 5.9 billion yuan and threatening its ability to
repay the trust loan.
China's coal industry has been battered by falling prices
over the last year. Several other banks and trust companies are
facing losses on loans to another coal company, Liansheng
Analysts have expressed increasing concern in recent years
about Chinese banks' exposure to off-balance-sheet risks.
While trust products and other so-called wealth management
products typically don't carry a formal guarantee from banks
that help to create and sell them, bankers worry that investors
widely perceive them as carrying an implicit guarantee from
That means that banks may face pressure to shield investors
from losses in order to protect their reputations, even if they
are not legally required to do so.
($1 = 6.0460 Chinese yuan)
(Reporting by Xie Heng and Gabriel Wildau; Editing by