The Case Study Of The TOT Products Default Of Sichuan Trust

In 2018,the People’s Bank of China jointly with the China Securities Regulatory Commission,the China Banking and Insurance Regulatory Commission and the State Administration of Foreign Exchange issued the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions".The issuance of this document marks the arrival of the era of strong supervision in China’s asset management industry.At the end of 2019,the trust industry became the second largest financial pillar industry after banks with a total asset scale of 22 trillion.In the following year,under the huge impact of the new crown epidemic,China’s macro economy fluctuated violently,causing many enterprises to go bankrupt and closing down,and many economic projects were slowed down,which in turn led to a slowdown in the return of funds from many trust projects.Coupled with stricter supervision,defaults or delays in payment of trust products and bank wealth management products frequently occur,and the entire trust industry is "walking on thin ice".In this paper,Sichuan Trust is selected as a typical case of "default wave" in the asset management industry.Based on the introduction of relevant theories and research background,and then the events of default of Sichuan Trust TOT products are sorted out.According to the specific situation of default,targeted internal and external factors are taken into consideration.Based on the international situation,macro economy,regulatory policies,TOT product design and operation,the company’s internal risk management system,the company’s business performance and other aspects,the cause and impact of the TOT product default of Sichuan Trust are comprehensively analyzed,and relevant policy suggestions for implementation are put forward.The research conclusion of this paper shows that the main reasons for the TOT product default of Sichuan Trust are as follows: First,Sichuan Trust set the yield rate of products too high in the design process of TOT products,and under the influence of the "rigid payment" culture,resulting in too much pressure on trust products to pay when they are due.At the same time,the irregular use of Sichuan Trust TOT products in the operation process caused the projects that should have exploded several years ago to be concentrated at the same time through TOT,resulting in nuclear explosion.Second,Sichuan Trust has suffered from poor management in recent years,with its operating capacity,profitability and growth capacity declining sharply,resulting in its inadequate ability to resist risks.Third,the internal risk management system of Sichuan Trust is too formalized and the execution effect is seriously poor.In addition,the controlling shareholders and other major shareholders of Sichuan Trust illegally misappropriated the inherent loans and trust funds of the company and refused to return them after being ordered by the supervision,so that they could not provide sufficient funds in the face of the TOT product default,thus aggravating the extent of the default.Fourth,as China’s economic growth is slowing,regulators for preventing major financial risk,speed up the transformation and upgrading of the trust industry,return to the origin,the purpose of the trust business for rectification,opening to the outside world financial markets at the same time,the trust company’s legal compliance management put forward higher request,All these have had a great impact on the existing illegal operation of Sichuan Trust,and the impact of the coronavirus pandemic has made the poorly managed Sichuan trust "overwhelmed".The impact of the TOT product default of Sichuan trust mainly includes three aspects :(1)the impact on the trust industry.It is conducive to breaking the "rigid payment" culture of the trust industry and accelerating the return of the trust industry to its roots and transformation and upgrading.(2)The impact on trust companies.It will damage Sichuan Trust’s reputation,increase the company’s financing costs,and thus hinder the development of the main business.(3)The impact on investors.It will cause huge losses to relevant investors and reduce the enthusiasm of other investors to participate,but it can also serve as a warning to other investors.Finally,in order to promote the healthy development of trust companies and TOT products,this paper puts forward the following targeted suggestions :(1)accelerate the standardized development of trust TOT products;(2)Improve the core competitiveness of trust companies;(3)Improve the risk management system of trust companies;(4)Improve the regulatory system and legal system of the trust industry.