KPMG tapped to audit $215b Chinese shadow banking giant
The Chinese shadow banking giant whose liquidity crisis has fanned fears about financial contagion is planning to restructure its debt and has hired KPMG to conduct an audit of its balance sheet, people familiar with the matter said.
Zhongzhi Enterprise Group hired KPMG in late July to review its balance sheet amid a worsening liquidity crunch, said the people, asking not to be identified as the matter is private. The Beijing-based company plans to restructure debt and sell assets after the review to repay investors, the people said. The company manages more than 1 trillion yuan ($215 billion) of assets.
KPMG is charged with helping the troubled Chinese company restructure some of its $2.15 billion in assets. Getty
It wasn’t immediately clear how many products Zhongzhi has defaulted on and whether the company has sufficient assets to cover the shortfall if liquidated, said the people, adding that any restructuring process will likely be lengthy. Zhongzhi has suspended payments on nearly all its products, the people said.
The Chinese firm didn’t respond to emails asking for comment, while calls to KPMG weren’t answered.
Zhongzhi, one of the country’s largest private wealth managers, is the latest financial giant to face the prospect of failure as the fallout from a deepening property slump spreads. Country Garden Holdings, which was previously the nation’s biggest property developer, is on the brink of default after sales plunged and it failed to meet an initial deadline to pay coupons on dollar bonds.
In a sign that Chinese authorities are worried about potential contagion, the banking regulator has set up a task force to examine risks at Zhongzhi. While little known outside China, Zhongzhi is among the biggest players
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