Chinese shadow banking conglomerate Zhongzhi Enterprise Group filed for bankruptcy liquidation on Friday, unable to repay its debts. Zhongzhi had warned investors in August about liquidity issues and declared insolvency in November. Shadow banks in China pool funds to offer loans for real estate, stocks, bonds, and commodities, often financing property developers. A government bailout is unlikely for Zhongzhi due to its involvement with non-standard wealth management products that are discouraged or banned by Chinese regulators, who liken them to a Ponzi scheme.
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00:00 It's Benzinga and here's what's on the block.
00:02 Chinese shadow banking conglomerate Zongzi Enterprise Group filed for bankruptcy liquidation
00:07 on Friday, unable to repay its debts. Zongzi had warned investors in August about liquidity issues
00:13 and declared insolvency in November. Shadow banks in China pool funds to offer loans for real estate,
00:20 stocks, bonds, and commodities, often financing property developers. A government bailout is
00:25 unlikely for Zongzi due to its involvement with non-standard wealth management products
00:30 that are discouraged or banned by Chinese regulators who liken them to a Ponzi scheme.
00:34 More trust loan defaults are expected as underlying investments were in real estate
00:39 debt and government financing vehicles. For all things money visit Benzinga.com