Overall trust industry risks are controllable: Executive

The overall risks of China's trust industry are controllable, although risk assets of the industry more than doubled year-on-year to reach 461.14 billion yuan ($65.8 billion) at the end of the third quarter, a senior executive of the China Trustee Association said on Thursday.

Accounting for 2.1 percent of total assets of the Chinese trust industry, the volume of risk assets was up by 33 percent from 347.44 billion yuan at the end of the second quarter this year, according to data previously released by the China Trustee Association.

In spite of this, overall risks are still under control, said Qi Jianming, full-time executive vice-chairman of the association.

As of the end of the third quarter, total assets of 68 trust companies nationwide dropped by 4.94 percent year-on-year to 21.99 trillion yuan, which was 16 percent lower compared with a record high of 26.25 trillion yuan at the end of 2017.

"The decrease in total assets of trust companies was mainly caused by the reduction of so-called 'passageway business'. China has rectified market irregularities, such as multi-layered nesting and idle funds, and has effectively improved the quality of its trust industry to better serve the real economy," Qi said at a news conference in Beijing.

In the past, trust companies often cooperated with banks in passageway deals to act as passive reservoirs for loans that bank originate but cannot keep on their own balance sheets without violating regulatory requirements on lending quotas, the capital adequacy ratio, and loan-to-deposit ratios.

The banking and insurance regulator tightened supervision of such activities as China is fighting a tough battle against financial risks. The China Trustee Association also joined the battle by issuing guidelines for trust companies to improve regulatory compliance and risk mitigation capacity.

Qi said the trust industry strengthened its support to the real economy this year. Outstanding trust assets directly invested in the real economy, excluding those invested in the real estate sector, reached 13.25 trillion yuan at the end of the third quarter, up 6.94 percent from the end of 2017. The volume accounted for 60 percent of the balance of total trust assets in China.