Special Forces Confront Chinese 'Investors' Demanding Failed Trust "Pay Back Our Money"

Tyler Durden's picture

"We have been cheated by CCB," exclaimed one Chinese investor who invested 1 million yuan ($160k) in China Construction Bank's Songhuajing River No.77 Trust (which offered returns of 9.8 to 12% per annum). It appears that a 12% yielding financial instrument was not hint enough of the risk to the dozens of investors who confronted police in troubled Sanhxi province yesterday demanding their money back from the trust which has missed 6 monthly payments in a row. People wearing white masks with the words "despicable bank" and "pay back our money" were among at least 30 investors facing special-forces officers in dark uniforms and the group dispersed soon after the bank had asked for more time, adding "the bank said they wouldn't risk their reputation."

 

"Investors" are not happy that their high-yielding incredibly risky asset has the potential for loss...

Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. branch.

 

People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer.

 

We have been cheated by CCB,” said Wang Fengying, 60, a Shanxi resident who said her husband had invested 1 million yuan.

And here is the product...

State-backed Jilin Province Trust Co. created the Songhuajiang River No. 77 product to raise funds to finance mining projects for Shanxi Liansheng Energy Co., the biggest private coal miner in the province, according to a contract for the product obtained from Li Taishan, the leader of the investors gathering in Taiyuan.

 

The trust offered investors an annual return of 9.8 percent to 12 percent, depending on the investment amount, with a minimum of 1 million yuan, the product contract showed. Construction Bank currently pays 3.25 percent on one-year time deposits, according to its website.

 

“They told us the interest rate is three times the bank saving rate,” Wang, the woman whose husband had invested in the Songhuajiang River trust, said. “They said they wouldn’t risk the bank’s reputation. It’s our hard-earned money.”

But as Bloomberg notes...

The unrest underscores the stress in China’s $1.75 trillion trust industry as loans sour in an economy that grew at the slowest pace in six quarters.

 

...

 

Investors in the product also gathered at Construction Bank’s Beijing headquarters three weeks ago asking for their money back.

and still no payment...but

At least 20 trust products have run into difficulty making payments since 2012, according to Beijing-based China Securities Co. All have avoided default as issuers or third parties such as state-owned bad-loan managers and guarantee firms eventually repaid investors in full.

It seems the people have been 'trained' to expect the bailouts for now - but as we noted before, this can only make the inevitable reality even more dramatically bad as risk returns to the shadow banking system.

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medium giraffe's picture

So that's why the DHS went shopping.

zorba THE GREEK's picture

They should have bought Greek Bonds. 

Gaius Frakkin' Baltar's picture

Sorry suckers but the bogus lure of 12% per annum is no match against government thugs making guaranteed wages to crush skulls... no matter the country. Better luck next time.

ZerOhead's picture

What part of the words global "Bail-in" don't they understand?...

TruthInSunshine's picture

The Chinese Economy is now growing at the slowest pace in 24 years - BASED ON CHINA'S OWN OFFICIALLY RELEASED DATA.

Think about that: Clinton bestowed Most Favored Nation trade status on China on May 26, 1994, or approximately 20 years ago!

http://tech.mit.edu/V114/N27/china.27w.html

I'll try to find the link regarding Chinese economic growth (or lack thereof, more appropriately) when I can (I posted it yesterday).

China is in for a good ass buggering, as are MANY "investors" such as the ones highlighted in this article.

Remember folks, the Chinese Central Bank (PBoC) created 4 times the amount of debt paper that our own dearly beloved Federal Reserve did over the same 4 1/2 year period.

Son of Loki's picture

"If you don't hold it, you don't own it."

 

 

The Navigator's picture

Which is why owning gold and silver is not just for the rich, everyone owns some.

About every 100 years, the consumer class gets fucked over with paper moeny issued by the gov-de-jour there.

BTW, it was the Chinese that 1st introduced paper money (according to the internets).

UselessEater's picture

'Reset' time required and nearing.

thestarl's picture

How long can they keep this shitshow from imploding TIS?

Offthebeach's picture

If you are not going to get paid back, 12% isn't enough. You should go for 14-16%.

Obamanomics/off

manofthenorth's picture

They should have bought MOAR GOLD !!!!!

Stuck on Zero's picture

Beware of walking into absolutely brand new, posh, investment houses and giving them your money. 

 

Its_the_economy_stupid's picture

or ANY investment house....for that matter

OldPhart's picture

Welcome to First World Status, bitchez...you're equivalent to America now!  Revel in it...

(then wash yourself off, that banker shit stinks to high heaven within seconds)

NoDebt's picture

""We have been cheated by CCB," exclaimed one Chinese investor who invested 1 million yuan ($160k) in China Construction Bank's Songhuajing River No.77 Trust "

Welcome to the party, pal.  To the banks, you're just FOOD.

ZerOhead's picture

Up the Songhuajing River No.77 Trust without a paddle. To be fair they did actually warn investors by using the word "trust' rather than "guaran-fucking-teed"...

tom a taxpayer's picture

Never mind the annual 9.8-12% trust fund return, I'll gladly take the 3.25 percent on one-year time deposit return from the despicable bank.

Casey Stengel's picture

Holy Cow! My employer direct deposits my salary in CCB! I better get it all in cash while I can. Long Yuan.

This was an informative article. I didn't know I was suppossed to be getting 3.25 %. I've got to start learning Chinese.

laboratorymike's picture

The returns are 3.25% on a bank account over there because inflation is far north of that. My in-laws over there are feeling the squeeze of ground beef going from 2 USD / half-kilo (pound) to 9 USD in two years, among many other things.

OldPhart's picture

While we went from $2.50 to $6 in two years..I feel their pain (really).

tahoebumsmith's picture

No worries, they just reported a 7.3% growth rate for last quarter...LOL Sucks for all those Chinese who wanted to be American.

 

 

 

NOZZLE's picture

Riceballs, ever heard of Madoff77?  its ok your money was put to good use, the guy who sold the investments his wife spent on $50000 purses at Neiman Marcus

nmewn's picture

"...1 million yuan ($160k)..."

Wait, wut?...lol.

willwork4food's picture

Shit. My net worth isn't close to that figure. That's a hell of alot of money to lose where you could just go a few hundred miles inland and live like a king the rest of your life. I'd be pissed too.

nmewn's picture

Location location location.

The man was trying to live above his means perhaps. Anyone not a pauper, should be aware that there are always "others" trying to get what you have, whether its a con on the street or a con at a bank ;-)

thamnosma's picture

Man, the world is getting sketchier by the day.

Ifigenia's picture

 "People wearing white masks with the words "despicable bank""

 

So, all crows under the sun are black. 

q99x2's picture

Dude's name is "Li" that you guys are looking for. Last I heard he was headed out of China with his Bernanke bucks on a jet to Russia.

Dr. Engali's picture

"Investors" cheated by a bank?! Get the fuck out?! That must be a new phenomenon, because I've never heard of that happening once in the thousands of years of banking history. Fucking idiots.

Buck Johnson's picture

They are going to have a rough day real soon.

StychoKiller's picture

Ain't she currently in her late 60s, early 70s?

OldPhart's picture

For us geezers, she's well preserved and has auto-respiration.

Please don't deny us our pleasures...

AdvancingTime's picture

China has entered a great credit trap. China is awash in overcapacity and debt. After several years of growing debt concern is rising the whole unstable pyramid is about to come crashing down bringing China and possibly the global economy with it. This is not just about writing off a few bad loans. The shadow banking sector is so large that concerns exist about contagion and a domino series of defaults that might rack the economy as savers lose money. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

TheReplacement's picture

If they keep bailing them out, hello inflation.

NoDecaf's picture

Maybe the bank official can offer the "investors" a double or nothing shot if they can choose the winning fortune cookie from a bucket. All under the watchful eyes of the special police of course.

QQQBall's picture

At least it ain't the ABQ PoPo

Ban KKiller's picture

You saw the Santa Fe cop who just resigned?

PennilessPauper's picture

"investors"  no shortage of idiots on this Blue Marble.  LOL, WTF did they expect?  Giving their money to some one else to invest.  Invest in rice, beans, and gas next time morons.

pitz's picture

This is the stuff that usually would be great for gold demand. 

Dr. Bonzo's picture

The fucktards in this article are the very same people cramming gold shops. What part of this is hard to grasp? The dude lost one million yuan in a ponzi scheme.... But he's going to go out and buy gold? He done BOUGHT his gold...it's exactly the same gold he's going to offload to raise cash once his property deals start also going south.

The schizophrenia is truly staggering. In one full breath you guys can laud Chinese for being "visionaries" because they happen to be buying gold.... and fools and suckers for investing in some fund scam. I suggest they're neither. There's an open spigot of free money flooding the Chinese markets, and the lucky recipients, commies and their cronies, are plowing their money wherever they can as fast as they can.

We're still left with the same question. Do massive defaults across markets not force Chinese to start dumping gold to cover losses?

The wheels on the bus are going to fall off's picture

No it forces them to start dumping UST bonds and reserves instead, this then will appreciate the gold they have acquiried at unprecedented amounts over the last 5 years.

Tell me this, who in their right mind would buy gold at unprecedented amounts at $1500 + to then start dumping it at $1300 -

This is the best way China can destabalize the US without it seeming a provocation of war.....

I heard a chinese businessman recently say, the world is letting us buy gold with worthless printed paper and not doing anything about it......

This isnt real economic Bonzo, this is a scam!  

 

vincent's picture

Sounds like they're learning about the short end of the capitalism stick.

NOZZLE's picture

Riceballs, ever heard of Madoff77?  its ok your money was put to good use, the guy who sold the investments his wife spent on $50000 purses at Neiman Marcus

Ban KKiller's picture

China, to me, is all about floating pigs in the rivers. Investors are the pigs, obviously...

Long fried pork skins. 

Hylandr's picture

Would u like some wine with that rice?

dunce's picture

How do you say Ponzi scheme in Chinese?

Iam_Silverman's picture

"How do you say Ponzi scheme in Chinese?"
YuSo Fukked.