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First Trust Company Registered According to New Rules
Chung Mei Trust & Investment Co. Ltd became the first legal trust company approved by China's central bank, the People's Bank of China (PBOC), after three years of adjustment to the country's trust companies.
According to a new regulation on the management of trust companies launched by the central bank in January this year, the company will no longer do banking businesses, such as collecting deposits and giving loans, said Wang Zhongmin, the company's president at a press conference Friday.
And the company's securities businesses have been separated from the company and merged with a counterpart under another trust company to form a new securities company, he added.
Chung Mei will prioritize the key trust businesses, such as money trusts, property and equity trusts and common funds, as well as fund operations, investment banking and investment management, Wang said.
China's first Trust Law has just been put into effect this month, which ended the long-term practice of trust businesses having no legal guarantee for development in the past twenty years.
The country once had more than 1,000 trust companies and about 239 ceased to operate when the PBOC started the latest clean-up in the market in 1999.
"We are quite confident of the rosy future of China's trust businesses," Wang said. Chung Mei is known for having a large number of clients in the coal-mining industry and these enterprises are eager to seek financial consulting services as they will be confronted with mergers or listings after China enters the WTO.
And the country now has more than 7 trillion yuan of residents' deposits. "This large amount of money will be put into investments if there are easy and diversified tools with relatively low risks, " said Liu Mengge, manager of the Department of Research and Development under Chung Mei, "This is a great opportunity for trust companies."
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