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Mainland closes Trust Company

Mainland closes Trust Company

(China) - China has wound up a major trust firm as part of Beijing's efforts to clean up the troubled sector. China's Central Bank has ordered the China Trust and Investment Corp for Economic Development to cease all its financial activities other than securities operations forthwith "in view of serious rule violations in its operations".

The Central Bank is sending in a team to liquidate the firm and its securities business is to be placed under the trusteeship of China Galaxy Securities. Foreign debt claims can be registered up until September 7, although the trust firm had a limited amount of foreign debt amongst its nearly 20 billion yuan (US$2.4 billion) in assets and this is with just the one creditor.

China Trust and Investment Corp for Economic Development, which operated 20 securities outlets nationally, was until last year, owned by the Ministry of Finance. China's Central Bank has plans to cut the number of trust firms in the country to 60 from 238. It has already banned trusts from taking deposits, raising foreign debt or issuing bonds and has instructed healthy ones to review their businesses and re-register with the Government.
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