Prominent bank in China goes bankruptcy

A big Chinese financial company has asked for legal protection because it can’t pay the money it owes.

A court in Beijing agreed to the request from Zhongzhi Enterprise Group, which has given lots of money to real estate companies.

Chinese officials started looking into “suspected illegal activities” by the company in November.

It was reported that ZEG declared it couldn’t pay its debts.

The group that is having a hard time told investors in a letter in November that it owes more money – up to $64 billion – than it actually has, which is about $38 billion.

On Friday, a court in Beijing wrote on the social media app WeChat that ZEG doesn’t have enough money to pay all its debts, and can’t pay them back completely.

ZEG is a big company in China that works in the shadow banking industry. Shadow banking is a system of lenders and brokers who are not part of the regular banking system.

Shadow banking is not regulated and doesn’t have the same rules and limitations as regular banks.

Informal lending has always been a part of China’s economy, but shadow banking started to become more popular after the 2008 global financial crisis when credit was hard to come by.

China’s unofficial banking industry is worth about $3 trillion. It often gives money to the country’s property market to help it survive. The industry that used to do really well is now in trouble because it doesn’t have enough money. Some of the biggest companies might not be able to stay in business.

At its best, ZEG’s asset management arm managed over a trillion yuan ($139 billion; £110 billion).

However, it was not protected from the bigger problem with property, and it had more problems in November when authorities said they had taken legal actions against “many suspects. ”

We still don’t know who they are and what they do in the company. The person who started the company, Xie Zhikun, passed away from a heart attack in 2021.

The latest news at ZEG has made people worried about more problems in the world’s second biggest economy. This comes after the company Evergrande failed and Country Garden had money troubles.

Troubled property developers owe Chinese banks a lot of money, about 30% of the banks’ assets.

China’s real estate industry contributes to one third of its economy. This includes homes, renting and helping people find a place to live, and making building supplies and things that are used in apartments.