Saturday, September 18, 2021
Investments paid out too early
Evergrande admits mistakes made by managers
Chinese real estate giant Evergrande is in serious trouble. Now the company admits mistakes – at least with several managers – and announces “severe penalties”.
The ailing Chinese real estate giant Evergrande has admitted misconduct by several high-ranking managers. Six executives illegally redeemed several of the company’s investment products in advance. Evergrande said the matter was being taken very seriously. The company is demanding a repayment of the redeemed funds from the managers and will impose “severe penalties”.
Normally, the company’s own investments are only allowed to be paid out after a certain holding time. The managers reportedly cashed the investments ahead of schedule, contrary to the planned payment schedule.
The misconduct of the executives takes place in the midst of an existence-threatening crisis of the highly indebted real estate giant based in Shenzhen. Evergrande’s debt is the equivalent of more than $ 300 billion. Since the beginning of the year, the Group’s share price has fallen by three quarters. Recently, several rating agencies had further downgraded Evergrande’s creditworthiness and warned of payment defaults.
It was only on Friday that the Chinese central bank injected 100 billion yuan in liquidity into the banking system, the first new injection of funds in more than seven months. The move was aimed at “calming the markets amid the problems of China Evergrande,” said Anna Stablum of broker Marex. The giant real estate developer is struggling to get its debt under control, raising fears that its failure could spill over into other markets.
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