IFR Asia – January 20, 2018

People

&Markets

CSRC fines issuer for bond fraud

A Chinese company which defaulted on

two onshore bonds in August 2017 faces

AûlNEûOFû2MBMû53M  ûFORûFRAUDû

related to the debt offerings.

The China Securities Regulatory

Commission found that privately owned

WUYANG CONSTRUCTION GROUP faked receivables

ANDûSETûASIDEûINSUFlCIENTûPROVISIONSûINû

ORDERûTOûMEETûTHEûlNANCIALûREQUIREMENTSû

to conduct the two public offerings of

notes in 2015 for a combined Rmb1.36bn,

ACCORDINGûTOûAûlLINGûONûTHEû3HANGHAIû3TOCKû

Exchange.

Tebon Securities, the underwriter of the

TWOûNOTESûSUBMITTEDûTHEûlLINGûLASTûWEEK

4HEû#32#ûREQUIRESûTHATûFORûANYûPUBLICû

offering of bonds in the stock exchange

MARKETûTHEûAVERAGEûDISTRIBUTABLEûPROlTSû

of issuers in the preceding three years be

enough to cover one year of interest for

the bonds being sold.

The CSRC also found that the company

USEDûTHEûFALSEûlNANCIALûREPORTSûFORû

two private placements of bonds with

total principal amount of Rmb380m in

December 2015 and April 2016.

In August 2017, Wuyang Construction

failed to redeem a Rmb800m three-

year non-put two bond when investors

registered Rmb799m of the notes for

redemption, which also triggered a cross-

default on another Rmb560m notes of the

company.

!CCORDINGûTOûAûREPORTûINûTHEûOFlCIALû

Shanghai Securities News, retail investors

held 49.09% and 57.68% of the two notes

respectively.

The CSRC said it had decided to impose

AûTOTALûlNEûOFû2MBMûONû7UYANGû

#ONSTRUCTIONûANDûlNESûRANGINGûFROMû

Rmb50,000 to Rmb600,000 on 20 people

involved in the fraud, including Chen

:HIZHANGûTHEûCHAIRMANûOFûTHEûCOMPANYû

ACCORDINGûTOûTHEûlLING

The regulator has stepped up efforts to

clean up the exchange-traded bond market

under its supervision, which has expanded

20 times in volume in the past two years.

In November, the watchdog went

out of its way to highlight the “great

SIGNIlCANCEvûOFûAûCOURTûJUDGMENTûINû

southwestern Guizhou province, in which

two executives of privately owned garment

maker Xiamen Shengdawei Clothing were

sentenced to two and three-year prison

terms for fraud.

The Xiamen Shengdawei Clothing case

ISûTHEûlRSTûCRIMINALûPROSECUTIONûFORûFRAUDû

related to a bond offering in China.

INA ZHOU

China chief

Chow to leave

Credit Suisse

Mervyn Chow , Greater China CEO and co-

head of investment banking and capital

MARKETSûFORû!SIAû0ACIlCûISûTOûLEAVEû CREDIT

SUISSE , according to people familiar with

the situation.

Chow, who is known for his close

connections with major technology

clients, has resigned for a job outside the

banking industry, the people said.

His departure will be a blow for the

Swiss bank, which is looking to Asia to

drive growth. CEO Tidjane Thiam has

made Asian entrepreneurs a key part of

HISûSTRATEGYûRAISINGûAûûPROlTûTARGETû

FORûTHEû!SIAû0ACIlCûWEALTHûMANAGEMENTû

and connected business to SFr850m

(US$884m) at November’s investor day.

The bank reported adjusted pre-tax

PROlTSûINû!0!#ûOFû3&RMûINûTHEûlRSTû

nine months of 2017, down 10% on the

previous year after a weaker showing

from its restructured markets division.

Chow’s IBCM department, however, has

been a bright spot: advisory, underwriting

ANDûlNANCINGûINû!0!#ûPRODUCEDûREVENUESû

OFû3&RMûINûTHEûlRSTûNINEûMONTHSûOFû

the year, up 40% on the same period in

2016.

Chow has spent almost two decades

at Credit Suisse in various investment

BANKINGûPOSITIONSûRUNNINGûEQUITYû

capital markets, debt capital markets,

CONVERTIBLESûANDûEQUITYûDERIVATIVESû#HOWû

was promoted to Greater China CEO in

October, in addition to his existing titles

as co-head of IBCM and China CEO.

Credit Suisse declined to comment.

FIONA LAU, SUMEET CHATTERJEE

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