This weekend, a 69 year old Guangzhou woman Su Yufu’s leveraged stock speculation broke the news on the screen. According to relevant reports, China Securities Co.Ltd(601066) securities granted a credit of 66 million yuan to Su Yufu. After falling below the closing line, the old man was unable to recover, and more than 10 million yuan of China Securities Co.Ltd(601066) securities had not been paid off after Qiang Ping.
The reporter of the daily economic news noted that according to the judgment documents, Su Yufu’s position explosion occurred in February 2018. The Beijing Arbitration Commission made an award in May 2019, China Securities Co.Ltd(601066) applied to the court for enforcement in July 2019. Finally, it was determined that Su Yufu had no property available for enforcement in September 2019.
It is worth mentioning that the reporter found that since 2018, credit business risks such as securities margin trading and pledged repo have gradually surfaced, and 2019-2020 happens to be the peak of the industry’s centralized provision for credit impairment. From 2019 to the third quarter of 2021, listed securities companies alone have made provision for credit impairment of up to 54.6 billion yuan, and many securities companies have also burst out a number of cases related to credit business.
become the peak of credit impairment provision of securities companies in 2020
According to the statistics of China stock market news choice financial terminal, in 2019, 37 listed securities companies accrued a total credit impairment loss of 18.943 billion yuan. In 2020, this data expanded to 31.564 billion yuan. However, by the first three quarters of 2021, the cumulative credit impairment loss of listed securities companies decreased to 4.115 billion yuan.
This does not mean that securities companies have no provision for credit impairment before 2019, but before 2019, some securities companies incorporated credit impairment into asset impairment as a sub item of asset impairment, so the reporter did not make statistics. As can be seen from the above statistics, from 2019 to 2020, the credit impairment provision of securities companies entered the peak for two consecutive years, and most of the historical problems were not cleared up until 2021.
As shown in the table below. From 2019 to the first three quarters of 2021, Citic Securities Company Limited(600030) , Haitong Securities Company Limited(600837) , Orient Securities Company Limited(600958) , Guotai Junan Securities Co.Ltd(601211) , Everbright Securities Company Limited(601788) accrued the most credit impairment losses. Among them, Citic Securities Company Limited(600030) during the above-mentioned period, a total of 9.962 billion yuan of credit impairment was accrued, the peak occurred in 2019, and 6.581 billion yuan of credit impairment loss was accrued throughout the year. The second is Haitong Securities Company Limited(600837) , during which a total of 8.953 billion yuan of credit impairment was accrued. In China Securities Co.Ltd(601066) overall, the provision for impairment is not much. During the above-mentioned period, a total of 1.173 billion yuan was withdrawn, of which there was a small reversal in 2019 and 2021, and 1.319 billion yuan of credit impairment was withdrawn in 2020.
The reason for the reversal of credit impairment is that after the loss is accrued, the securities companies have recovered part or all of their creditor’s rights in various ways. It is worth mentioning that this situation is not uncommon in 2021. Among the above 37 securities companies, 17 have reversed credit impairment losses, the most is Guosen Securities Co.Ltd(002736) , and RMB 711 million has been reversed in the first three quarters of 2021.
However, the credit impairment losses of two securities companies still exceeded 1 billion yuan in the first three quarters of 2021, Citic Securities Company Limited(600030) had a credit impairment loss of 1.49 billion yuan, and Haitong Securities Company Limited(600837) had a credit impairment loss of 1.518 billion yuan.
ten million creditor’s rights may take a hundred years to pay off
On January 23, after su Yufu’s news fermentation, China Securities Co.Ltd(601066) issued a Clarification Announcement, saying that the company had conducted due diligence on the customer in strict accordance with the relevant regulatory rules of margin trading business, and the customer’s trading experience, trading assets, integrity status and risk assessment results met the access conditions of margin trading. At the same time, it was pointed out that the customer’s credit account fell below the recovery line agreed in the contract in February 2018 and failed to supplement the collateral in time, and failed to offset all the creditor’s rights after compulsory closing. In order to ensure the safety of the company’s assets and safeguard shareholders’ rights and interests, the company claims creditor’s rights to relevant judicial authorities according to law. This case is now in the process of implementation.
According to media reports, Su Yufu still owed China Securities Co.Ltd(601066) more than 10 million yuan after his position was closed. At present, Su Yufu’s monthly pension of more than 10000 yuan is only 1011 yuan, which is classified as his living expenses, and the remaining 9000 yuan is used to pay off China Securities Co.Ltd(601066) debts. This means that Su Yufu’s annual repayment amount is only about 100000 yuan, and his tens of millions of debts can be paid off in 100 years. At the age of 69, China Securities Co.Ltd(601066) probably can’t recover all the creditor’s rights.
This is also the risk faced by many securities companies in margin trading, agreed repo and other businesses – if the customer’s position explodes and the principal cannot be fully recovered after strong leveling, they often win the lawsuit by resorting to the law, but they often encounter the situation that the customer’s assets cannot be fully paid off or even have no enforceable property.
Citic Securities Company Limited(600030) stepped on leikangdexin for stock pledge repurchase is a typical example. According to the disclosure of Citic Securities Company Limited(600030) periodic report, the creditor’s rights involving kangdexin reached 1.418 billion yuan. Finally Citic Securities Company Limited(600030) won the lawsuit without suspense, but only 56.8749 million kangdexin shares were obtained in the implementation link. Kangdexin finally withdrew from the market, and the value of kangdexin shares obtained by Citic Securities Company Limited(600030) is almost zero relative to its creditor’s rights.
However, China’s major securities companies are still keen on credit business. In recent years, the securities industry has a strong incentive to refinance and supplement capital, among which the capital intermediary business is the focus of the industry.
For example, in the Citic Securities Company Limited(600030) allotment currently under way, according to the previous announcement, of the total fund-raising amount of Citic Securities Company Limited(600030) shares of no more than 28 billion yuan, no more than 19 billion yuan will be used for capital intermediary business.
because of the risks, its profits are also very rich. According to the data of China stock market news choice financial terminal, the above 37 listed securities companies realized a total net interest income of 135.395 billion yuan from 2019 to the first three quarters of 2021, much higher than the credit impairment loss of 54.6 billion yuan in the same period.
Among them, in the first three quarters of 2021, after clearing most of the past bad debts, the securities companies obtained a richer return – after paying a credit impairment loss of 4.115 billion yuan, they obtained a net interest income of 44.71 billion yuan.
Securities companies can spread risks through thousands of customers and a series of strict systems, but for individual investors, Su Yufu’s case is more thought-provoking – because as far as China Securities Co.Ltd(601066) is concerned, the dispute with Su Yufu is only one of the myriad threads of daily operation. But for Su Yufu, the accumulation in his life for decades will return to zero once, which must be a different taste in his heart.
