Securities Brokerage Equity Pledge "Risk Bill": 38 Brokerages Credit Impairment 17 Billion 300 Million More Than 33 Billion 500 Million Litigation To Be Solved

With the closing date of the April 30th annual report approaching, the annual report disclosure of listed brokerages has also come to an end.

In twenty-first Century, the economic report reporters found that as of now, 38 listed brokerages or their parent companies have disclosed their annual reports, and the credit impairment caused by stock pledge default in the annual report data has aroused heated debate in the market. Data show that the total amount of credit losses of 38 brokerages is 17 billion 300 million yuan, accounting for 16.31% of the total net profit, and far exceeding the 9 billion 376 million yuan credit loss in 2018.

And this is just the corner of the current stock pledge risk.

In twenty-first Century, the economic report reporters collated that since 2018, a large number of shares pledged repo are facing a default situation due to stock market fluctuations and macroeconomic downturns, and many brokerages have joined the "Recovery Army" to make up for losses through clearing and litigation.

According to Dong Cai choice data, since 2019, as of April 29th, the securities company as a plaintiff publicly disclosed shares pledged repo trading disputes, up to 147, involving litigation amount of more than 33 billion 562 million yuan.

At present, some cases have been successfully recovered or settled out of court, but some of them have not yet been brought into effect, or even directly lead to the impairment loss of listed companies.

"The securities companies do not have such a strict standard for bad debts. For most of the securities companies that do not have the estimated liabilities, there is a real loss." Southern China a medium-sized brokerage investment banking department on twenty-first Century economic report reporter pointed out.

High credit loss

With the frequent occurrence of various risk events, the stock pledge "trampling" incident has caused a lot of pressure on the performance of securities companies.

Public information shows that the current listed annual reports of securities dealers, Zhongyuan securities, Everbright Securities, Tianfeng securities, Western securities four listed securities brokerage credit losses far exceeded the company's net profit in 2019. Among them, the loss of central bank securities credit impairment is as high as 350 million yuan, which is equivalent to 6 times the net profit from the same period (58 million 222 thousand and 700 yuan).

At the same time, entering the 2020, the pledge risk of Zhongyuan securities is still eroding the company's performance. In the first quarter of 2020, the company made a total of 66 million 501 thousand and 500 yuan for the preparation of credit impairment for a single financial asset with credit impairment, specifically involving 5 stocks of the stock market, including Shen Wu energy saving, Xinguang Yuan Cheng, and the Great Wall film and television.

The Western securities also "stepped on the thunder lot". The company made a loss of 653 million yuan in 2019, but its net profit in the same period was only 202 million yuan. The company's preparation for the hypothecation of LETV, Zhongnan culture and *ST Xinwei shares is about 251 million yuan, 14 million 54 thousand and 700 yuan and 283 million yuan respectively.

On the scale of impairment, a total of 6 brokerages lost more than 1 billion yuan in credit losses in 2019. However, the most serious loss in 2019 is Haitong Securities. Haitong Securities lost 10 billion 541 million yuan in 2019, accounting for 27% of its net profit in 2019 (10 billion 541 million yuan).

According to Haitong Securities, the loss of credit impairment of other creditor's investments was mainly increased, but its annual report did not disclose specific items causing impairment losses. However, it is certain that the amount of receivables, leasehold funds, other capital investments, and other assets purchased by the company are higher than those of the 739 million yuan, 511 million yuan, 462 million yuan and 356 million yuan respectively.

The loss of credit was more than 2 billion yuan and Guotai Junan, which lost 2 billion 50 million yuan in 2019, compared with 976 million yuan in 2018, the credit impairment loss increased by 109.89% over the same period last year.

For the loss of credit impairment, Guotai Junan pointed out in the statement that it was mainly prepared for the impairment of stock repurchase and stock pledge repurchase. The company's annual report 2019 showed that the impairment loss of buying and selling financial assets was 1 billion 37 million yuan, accounting for more than 50%, in the 2 billion 50 million yuan of credit impairment losses. Among them, the preparation of the credit impairment provision for the resale of the financial assets is mainly caused by the stock pledge repurchase business.

In addition, CITIC Securities's credit impairment losses in 2019 were as high as 1 billion 891 million yuan. CITIC Securities pointed out that the company's value of buying and selling back financial assets was 790 million yuan, occupying a higher proportion of credit impairment losses.

"The risk of stock pledge business mainly concentrated in 2018 and was relieved to a certain extent in 2019. However, there are still many stocks of stock pledge risk to be disposed of. Therefore, many brokerages in 2019 concentrated on dealing with a group of stock pledge business risks, and prepared a larger impairment allowance, thus forming a greater pressure on the annual profits and financial indicators of the annual reports." He Nanye, a special researcher at Suning Financial Research Institute, pointed out.

The amount involved is more than 33 billion 500 million yuan.

In addition to the impairment loss that has been reported in the annual report, there are many stock pledge risks still lurking in the "underground".

According to the foregoing investment bankers, the main means of dealing with pledge risks include: Collection litigation, self digestion (loss reduction) and transfer to third parties. Prior to the twenty-first Century economic news reporter has exclusive reports, in order to deal with the stock has already defaulted stock pledge, some brokerages packaged it as a bad debt transfer to the Asset Management Co disposal.

However, at present, the mainstream disposal route of the securities companies is still mainly based on litigation collection.

According to Dong Cai choice data, since 2019, as of April 29th, the securities company as a plaintiff publicly disclosed shares pledged repo trading disputes, up to 147, involving litigation amount of more than 33 billion 562 million yuan. Because some lawsuits such as Guo Hai securities, Northeast Securities and China Merchants Securities have not disclosed the specific amount of litigation and the defendant's status, the actual amount of litigation is far higher than this amount.

The largest amount of information involved is CITIC Securities. Choice data show that in 2019, CITIC Securities disclosed 9 lawsuits relating to the dispute of stock pledge repurchase business, involving a total amount of 6 billion 130 million yuan, involving shares of nine listed companies such as Xingyuan environmental protection, LONCIN general, *ST Kang, Oriental Garden, *ST Longli, Yin Ji media, first flight hi tech, Shanghai lace and Guizhou lark.

It is worth mentioning that most of the listed companies have suffered from risk events since 2018, and the capital chain of shareholders has been broken. Even some enterprises are facing the risk of delisting because of illegal activities, and the result of litigation is quite slim.

The largest number of trampling companies is Pacific Securities. Since 2019, as far as the Pacific Securities has already disclosed, there are up to 18 disputes about stock pledge repurchase business, involving stocks of 12 listed companies, such as contemporary Oriental, Pang Chi technology, Mei Du energy, Tianxia intelligence, win win global, victory precision, beautiful ecology, ST galaxy, Xiamen Hua Electronics, Sheng Yunhuan insurance, Xiangyuan culture and Cong interconnect.

In April 25th, the Pacific Securities announced that the company had counted the litigation (Zhong Cai) involving the company and its subsidiaries in the past 12 months, and the total amount of the litigation (Zhong Cai) was 932 million yuan.

At present, the Pacific Securities has already made preparations for the impairment of assets claims related to some cases. Of them, the value of impairment was 178 million yuan before 2019, 57 million 204 thousand and 300 yuan in 2019, and 32 million 587 thousand and 800 yuan in value (32 million 587 thousand and 800 yuan), reducing the net profit in 2019 by about 18 million 462 thousand and 400 yuan. In view of the fact that the case has not yet been concluded, the impact of the litigation (Zhong Cai) matter on the company's current profits or subsequent profits is temporarily unpredictable.

It is worth mentioning that in the major stockbrokers' equity pledged repurchase litigation disputes, many shareholders have "entrapped" a number of brokerages.

Such as *ST Kang's shareholder Kang De investment group also boarded the "defendant seat" of merchants and CITIC two brokerages, involving the amount of 1 billion 518 million yuan; Xinguang holding group was prosecuted by many listed brokerages such as Zhongyuan securities and Southwest Securities; the Jubilee technology shareholder Shihezi Rui Chen equity investment partnership (limited partnership) was prosecuted by Zhongyuan securities and Everbright Securities at the same time.

"Since 2018, a number of securities companies have taken the initiative to adjust the position of stock pledge repurchase business, take measures to carry out incremental business prudently, and the stock size of stock pledge business has continued to decline, but stock pledge has become an important source of asset impairment, and attention must be paid to it." The Great Wall securities non silver financial team pointed out.

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