July 18, 2020 / 7:59 AM / a month ago

China's Tomorrow Holdings slams seizure of its financial firms

SHANGHAI (Reuters) - Chinese conglomerate Tomorrow Holdings Co on Saturday lashed out at a move by regulators to seize nine of its affiliated financial firms, in rare public criticism that was quickly removed from its social media account.

The statement came a day after Chinese financial regulators announced that they had taken over for one year the brokerages, trust companies and insurers linked to the embattled group, amid a campaign to stem systemic financial risks in a slowing economy.

Tomorrow Holdings said it had been actively moving forward with asset disposals, which the surprise takeover had disrupted, and that none of the institutions had faced liquidity risks or group protests from investors, and that regulators had exaggerated risks.

“With tight regulation limiting the firms’ business development, each institution still managed to operate normally,” the statement said. “However, they were flagrantly announced to be taken over. What is the purpose of that?”

Tomorrow Holdings questioned the motives of the regulators.

“The regulators have been pushing hard on the takeovers, so some of them can become corporate executives to delay their retirement. How much trade-off of fortune and power is behind this?” it said.

The regulators could not immediately be reached for comment on Saturday about the group’s statement.

On Friday, the China Banking and Insurance Regulatory Commission cited business violations in its takeover of Tianan Property Insurance Co of China, Huaxia Life Insurance Co, Tianan Life Insurance Co and Yi’an P&C Insurance Co., as well as New Times Trust Co and New China Trust Co.

The China Securities Regulatory Commission, meanwhile, said it had seized control of New Times Securities, Guosheng Securities and Guosheng Futures, accusing the firms of concealing shareholder information, among other violations.

The nine firms had combined assets of more than 1.2 trillion yuan ($170 billion) at the end of 2019, according to a calculation by Caixin, a Chinese financial media outlet, with Huaxia Life Insurance accounting for nearly half if that at 587.3 billion yuan.

Tomorrow’s statement was quickly replaced with a message from the WeChat Official Accounts Platform Operation Center saying that the content “violates regulations.”

The group also said that Xiao Jianhua, who controls the Beijing-based conglomerate, had returned to mainland China in early 2017 to fully cooperate with investigations.

Xiao, a billionaire with links to China’s Communist Party elite, vanished from public view in early 2017. He was last seen leaving the Four Seasons Hotel in Hong Kong in a wheelchair with his head covered, accompanied by several people described in media reports as mainland Chinese agents.

The group said in its statement that it sold assets in China and abroad for hundreds of billion yuan over the past three and half years, and has used 300 billion yuan of its own funds to repay principal and interests for investors of Tianan Property Insurance.

In 2019, regulators took over Baoshang Bank, a lender once controlled by Tomorrow, citing severe credit risks. The lender, which had operated nationwide, was revamped into a much smaller lender back in its home region of Inner Mongolia.

Reporting by Shanghai newsroom and Cheng Leng and Tony Munroe in Beijing; Editing by Gerry Doyle and William Mallard

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