{"id":9307,"date":"2021-05-24T02:10:14","date_gmt":"2021-05-24T00:10:14","guid":{"rendered":"https:\/\/thecryptowolf.net\/2021\/05\/24\/bahrain-suspends-entry-for-travellers-from-red-list-countries-report\/"},"modified":"2021-05-24T02:10:14","modified_gmt":"2021-05-24T00:10:14","slug":"bahrain-suspends-entry-for-travellers-from-red-list-countries-report","status":"publish","type":"post","link":"https:\/\/thecryptowolf.net\/2021\/05\/24\/bahrain-suspends-entry-for-travellers-from-red-list-countries-report\/","title":{"rendered":"Bahrain suspends entry for travellers from ‘Red List’ countries -report"},"content":{"rendered":"
\"Bahrain<\/div>

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Bloomberg<\/span><\/p>\n

Inside the Race to Avert\u00a0Disaster at China\u2019s Biggest \u2018Bad Bank\u2019<\/a><\/h4>\n

(Bloomberg) — It was past 9 p.m. on Financial Street in Beijing by the time the figure inside Huarong Tower there picked up an inkbrush and, with practiced strokes, began to set characters to paper.Another trying workday was ending for Wang Zhanfeng, corporate chairman, Chinese Communist Party functionary\u2014and, less happily, replacement for a man who very recently had been executed.On this April night, Wang was spotted unwinding as he often does in his office: practicing the art of Chinese calligraphy, a form that expresses the beauty of classical characters and, it is said, the nature of the person who writes them.Its mastery requires patience, resolve, skill, calm\u2014and Wang, 54, needs all that and more. Because here on Financial Street, a brisk walk from the hulking headquarters of the People\u2019s Bank of China, a dark drama is playing out behind the mirrored fa\u00e7ade of Huarong Tower. How it unfolds will test China\u2019s vast, debt-ridden financial system, the technocrats working to fix it, and the foreign banks and investors caught in the middle.Welcome to the headquarters of China Huarong Asset Management Co., the troubled state-owned \u2018bad bank\u2019 that has set teeth on edge around the financial world.For months now Wang and others have been trying to clean up the mess here at Huarong, an institution that sits\u2014quite literally\u2014at the center of China\u2019s financial power structure. To the south is the central bank, steward of the world\u2019s second-largest economy; to the southwest, the Ministry of Finance, Huarong\u2019s principal shareholder; less than 300 meters to the west, the China Banking and Insurance Regulatory Commission, entrusted with safeguarding the financial system and, of late, ensuring Huarong has a funding backstop from state-owned banks until at least August.The patch though doesn\u2019t settle the question of how Huarong makes good on some $41 billion borrowed on the bond markets, most incurred under Wang\u2019s predecessor before he was ensnared in a sweeping crackdown on corruption. That long-time executive, Lai Xiaomin, was put to death in January\u2014his formal presence expunged from Huarong right down to the signature on its stock certificates.The bigger issue is what all this might portend for the nation\u2019s financial system and efforts by China\u2019s leader, Xi Jinping, to centralize control, rein in years of risky borrowing and set the nation\u2019s financial house in order.\u201cThey\u2019re damned if they do and damned if they don\u2019t,\u201d said Michael Pettis, a Beijing-based professor of finance at Peking University and author of Avoiding the Fall: China\u2019s Economic Restructuring. Bailing out Huarong would reinforce the behavior of investors who ignore risk, he said, while a default endangers financial stability if a \u201cchaotic\u201d repricing of the bond market ensues.Just what is going on inside Huarong Tower? Given the stakes, few are willing to discuss that question publicly. But interviews with people who work there, as well as at various Chinese regulators, provide a glimpse into the eye of this storm.Huarong, simply put, has been in full crisis mode ever since it delayed its 2020 earnings results, eroding investor confidence. Executives have come to expect to be summoned by government authorities at a moment\u2019s notice whenever market sentiment sours and the price of Huarong debt sinks anew. Wang and his team must provide weekly written updates on Huarong\u2019s operations and liquidity. They have turned to state-owned banks, pleading for support, and reached out to bond traders to try to calm nerves, with little lasting success.In public statements, Huarong has insisted repeatedly that its position is ultimately sound and that it will honor its obligations. Banking regulators have had to sign off on the wording of those statements\u2014another sign of how serious the situation is considered and, ultimately, who\u2019s in charge.Then there are regular audiences with the finance ministry and the other powerful financial bureaucracies nearby. Among items usually on the agenda: possible plans to hive off various Huarong businesses.Huarong executives are often kept waiting and, people familiar with the meetings say, tend to gain only limited access to top officials at the CBIRC, the banking overseer.The country\u2019s apex financial watchdog\u2014chaired by Liu He, Xi\u2019s right-hand man in overseeing the economy and financial system\u2014has asked for briefings on the Huarong situation and coordinated meetings between regulators, according to regulatory officials. But it has yet to communicate to them a long-term solution, including whether to impose losses on bondholders, the officials said.Representatives at the People\u2019s Bank of China, the CBIRC, Huarong and the Ministry of Finance didn\u2019t respond to requests for comment.Focus on BasicsA mid-level party functionary with a PhD in finance from China\u2019s reputed Southwestern University of Finance and Economics, Wang arrived at Huarong Tower in early 2018, just as the corruption scandal was consuming the giant asset management company. He is regarded inside Huarong as low-key and down-to-earth, particularly in comparison to the company\u2019s previous leader, Lai, a man once known as the God of Wealth.Hundreds of Huarong staff, from Beijing division chiefs to branch employees in faraway outposts, listened in on April 16 as Wang reviewed the quarterly numbers. He stressed that the company\u2019s fundamentals had improved since he took over, a view shared by some analysts though insufficient to pacify investors. But he had little to say about what is on so many minds: plans to restructure and shore up the giant company, which he\u2019d pledged to clean up within three years of taking over.His main message to the troops: focus on the basics, like collecting on iffy assets and improving risk management. The employees were silent. No one asked a question.One employee characterized the mood in his area as business as usual. Another said co-workers at a Huarong subsidiary were worried the company might not be able to pay their salaries. There\u2019s a widening gulf between the old guard and new, said a third staffer. Those who outlasted Lai and have seen their compensation cut year after year have little confidence in the turnaround, while new joiners are more hopeful about the opportunities the change of direction offers.Others joke that Huarong Tower must suffer from bad feng shui: after Lai was arrested, a bank that had a branch in the building had to be bailed out to the tune of $14 billion.Dark humor aside, a rough consensus has begun to emerge among senior management and mid-level regulators: like other key state-owned enterprises, Huarong still appears to be considered too big to fail. Many have come away with the impression\u2014and it is that, an impression\u2014that for now, at least, the Chinese government will stand behind Huarong.At the very least, these people say, no serious financial tumult, such as a default by Huarong, is likely to be permitted while the Chinese Communist Party is planning a nationwide spectacle to celebrate the 100th anniversary of its founding on July 1. Those festivities will give Xi\u2014who has been positioning to stay in power indefinitely\u2014an opportunity to cement his place among China\u2019s most powerful leaders including Mao Zedong and Deng Xiaoping.What will come after that patriotic outpouring on July 1 is uncertain, even to many inside Huarong Tower. Liu He, China\u2019s vice premier and chair of the powerful Financial Stability and Development Committee, appears in no hurry to force a difficult solution. Silence from Beijing has started to rattle local debt investors, who until about a week ago had seemed unmoved by the sell-off in Huarong\u2019s offshore bonds.Competing InterestsHuarong\u2019s role in absorbing and disposing of lenders\u2019 soured debt is worth preserving to support the banking sector cleanup, but requires government intervention, according to Dinny McMahon, an economic analyst for Beijing-based consultancy Trivium China and author of China\u2019s Great Wall of Debt.\u201cWe anticipate that foreign bondholders will be required to take a haircut, but it will be relatively small,\u201d he said. \u201cIt will be designed to signal that investors should not assume government backing translates into carte blanche support.\u201dFor now, in the absence of direct orders from the top, Huarong has been caught in the middle of the competing interests among various state-owned enterprises and government bureaucracies.China Investment Corp., the $1 trillion sovereign fund, for instance, has turned down the idea of taking a controlling stake from the finance ministry. CIC officials have argued they don\u2019t have the bandwidth or capability to fix Huarong\u2019s problems, according to people familiar with the matter.The People\u2019s Bank of China, meantime, is still trying to decide whether to proceed with a proposal that would see it assume more than 100 billion yuan ($15.5 billion) of bad assets from Huarong, those people said.And the Ministry of Finance, which owns 57% of Huarong on behalf of the Chinese government, hasn\u2019t committed to recapitalizing the company, though it hasn\u2019t ruled it out, either, one person said.CIC didn\u2019t respond to requests for comment.The banking regulator has bought Huarong some time, brokering an agreement with state-owned lenders including Industrial & Commercial Bank of China Ltd. that would cover any funding needed to repay the equivalent of $2.5 billion coming due by the end of August. By then, the company aims to have completed its 2020 financial statements after spooking investors by missing deadlines in March and April.\u201cHow China deals with Huarong will have wide ramifications on global investors\u2019 perception of and confidence in Chinese SOEs,\u201d said Wu Qiong, a Hong Kong-based executive director at BOC International Holdings. \u201cShould any defaults trigger a reassessment of the level of government support assumed in rating SOE credits, it would have deep repercussions for the offshore market.\u201dThe announcement of a new addition to Wang\u2019s team underscores the stakes and, to some insiders, provides a measure of hope. Liang Qiang is a standing member of the All-China Financial Youth Federation, widely seen as a pipeline to groom future leaders for financial SOEs. Liang, who arrived at Huarong last week and will soon take on the role of president, has worked for the three other big state asset managers that were established, like Huarong, to help clean up bad debts at the nation\u2019s banks. Some speculate this points to a wider plan: that Huarong might be used as a blueprint for how authorities approach these other sprawling, debt-ridden institutions.Meantime, inside Huarong Tower, a key item remains fixed in the busy schedules of top executives and rank-and-file employees alike. It is a monthly meeting, the topic of which is considered vital to Huarong\u2019s rebirth: studying the doctrines of the Chinese Communist Party and speeches of President Xi Jinping. More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.\u00a92021 Bloomberg L.P.<\/p>\n<\/div>\n

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