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Bailout ordered for China’s failing P2P lenders

Bailout ordered for China’s failing P2P lenders

(17 August 2018 – China) China’s financial regulator has turned to the country’s four state-owned distressed-asset managers to deal with failing peer-to-peer lending platforms.

The bailout comes in the wake of closures by scores of P2P lenders across the country in recent months – their causes range from credit squeeze to mismanagement and outright fraud – that have caused panic and protests by aggrieved investors.

On Wednesday the China Banking and Insurance Regulatory Commission convened a meeting with senior executives from Huarong, Cinda, Orient and Great Wall – the state-owned asset management companies founded two decades ago to bail out China’s four biggest state-owned commercial banks.

It is not yet understood if the asset managers will use their own balance sheets to acquire distressed P2P loans or play a more limited role by providing asset custody, valuation, and intermediary services to aid the disposal of P2P loans.

A total of 165 lending platforms stopped allowing investor withdrawals in July alone locking up hundreds of billions of yuan of capital. Hundreds of P2P proprietors have absconded their investors’ cash in July, compared with 65 cases in June and 10 in May according to data compiled by Wangdaizhikia, which compiles research on China’s online lending businesses.

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