(China Alert) Foreign firms exit China’s trust industry

·Foreign participation in China’s trust industry is declining
·Capital requirements may force reevaluation of existing JVs
·Opportunities exist for new entrants with majority control

Update: Z-Ben Advisors has observed that foreign shareholders are leaving their joint venture trusts in China. Two global financial institutions have exited their ventures entirely and another has had its stake diluted significantly. These moves reflect major structural changes currently occurring in the trust industry. Capital requirements have increased markedly and new regulations are redrawing previously favored business lines. However, the recent exits are not a reflection of a fading industry. This shift will present opportunities for new entrants adopting a different tack. Majority control in trusts is now available to foreign firms and they remain the most flexible financial platform in China. It is clear that coming onshore with absolute control, no matter the platform, is the way forward for foreign firms’ China strategy.

A series of divestments by large foreign partners may trigger……

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