China's Zhongzhi Enterprise Group Declares Insolvency Amid Property Crisis

The shadow bank's liabilities, reaching up to $64 billion, more than double its assets, signaling potential ripple effects on the broader financial sector.

• Zhongzhi Enterprise Group, one of China's largest shadow banks, has declared insolvency, with liabilities reaching up to $64 billion, more than double its assets.
• The Beijing-based wealth management company's total liabilities are between 420 billion yuan ($59 billion) and 460 billion yuan, while its total tangible assets are at just 200 billion yuan.
• Zhongzhi's financial troubles began to surface in August when its subsidiary, Zhongrong International Trust, failed to repay investors who had bought its high-yielding investment products.
• The company's insolvency is closely tied to the ongoing property crisis in mainland China, which has affected major developers such as China Evergrande Group and Country Garden Holdings.
• Zhongzhi's insolvency could reignite concerns about the ripple effect of the property debt crisis on the broader financial sector, including banks, trust firms, and insurers.

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