Italy’s OTB aims for “important” acquisition, listing still a medium-term plan

Bloomberg

Inside the Race to Avert Disaster at China’s Biggest ‘Bad Bank’

(Bloomberg) — It was past 9 p.m. on Financial Street in Beijing by the time the figure inside Huarong Tower there picked up an inkbrush and, with practiced strokes, began to set characters to paper.Another trying workday was ending for Wang Zhanfeng, corporate chairman, Chinese Communist Party functionary—and, less happily, replacement for a man who very recently had been executed.On this April night, Wang was spotted unwinding as he often does in his office: practicing the art of Chinese calligraphy, a form that expresses the beauty of classical characters and, it is said, the nature of the person who writes them.Its mastery requires patience, resolve, skill, calm—and Wang, 54, needs all that and more. Because here on Financial Street, a brisk walk from the hulking headquarters of the People’s Bank of China, a dark drama is playing out behind the mirrored façade of Huarong Tower. How it unfolds will test China’s vast, debt-ridden financial system, the technocrats working to fix it, and the foreign banks and investors caught in the middle.Welcome to the headquarters of China Huarong Asset Management Co., the troubled state-owned ‘bad bank’ that has set teeth on edge around the financial world.For months now Wang and others have been trying to clean up the mess here at Huarong, an institution that sits—quite literally—at the center of China’s financial power structure. To the south is the central bank, steward of the world’s second-largest economy; to the southwest, the Ministry of Finance, Huarong’s principal shareholder; less than 300 meters to the west, the China Banking and Insurance Regulatory Commission, entrusted with safeguarding the financial system and, of late, ensuring Huarong has a funding backstop from state-owned banks until at least August.The patch though doesn’t settle the question of how Huarong makes good on some $41 billion borrowed on the bond markets, most incurred under Wang’s predecessor before he was ensnared in a sweeping crackdown on corruption. That long-time executive, Lai Xiaomin, was put to death in January—his formal presence expunged from Huarong right down to the signature on its stock certificates.The bigger issue is what all this might portend for the nation’s financial system and efforts by China’s leader, Xi Jinping, to centralize control, rein in years of risky borrowing and set the nation’s financial house in order.“They’re damned if they do and damned if they don’t,” said Michael Pettis, a Beijing-based professor of finance at Peking University and author of Avoiding the Fall: China’s Economic Restructuring. Bailing out Huarong would reinforce the behavior of investors who ignore risk, he said, while a default endangers financial stability if a “chaotic” repricing of the bond market ensues.Just what is going on inside Huarong Tower? Given the stakes, few are willing to discuss that question publicly. But interviews with people who work there, as well as at various Chinese regulators, provide a glimpse into the eye of this storm.Huarong, simply put, has been in full crisis mode ever since it delayed its 2020 earnings results, eroding investor confidence. Executives have come to expect to be summoned by government authorities at a moment’s notice whenever market sentiment sours and the price of Huarong debt sinks anew. Wang and his team must provide weekly written updates on Huarong’s operations and liquidity. They have turned to state-owned banks, pleading for support, and reached out to bond traders to try to calm nerves, with little lasting success.In public statements, Huarong has insisted repeatedly that its position is ultimately sound and that it will honor its obligations. Banking regulators have had to sign off on the wording of those statements—another sign of how serious the situation is considered and, ultimately, who’s in…