- By Peter Hoskins
- Business reporter
28 minutes ago
Employees of the asset management unit of troubled real estate developer Evergrande have been arrested by police in Shenzhen, southern China.
Meanwhile, the takeover of the company’s insurance division by a newly formed state insurer was announced on Friday.
Evergrande is at the center of a crisis that has gripped China’s real estate industry since 2021.
“Recently, public security organs took criminal enforcement measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co.,” the Shenzhen Nanshan District Police Bureau said on Saturday.
No further details were given about how many people were arrested, what their identities were – except for the person identified only as Du – or what charges they face.
Police also said the case was still under investigation and investors could file complaints with authorities.
Evergrande Financial Wealth Management Co. is a wholly owned subsidiary of Evergrande, founded in 2015 and based in Shenzhen.
According to his LinkedIn profile, Du Liang is the general manager of Evergrande Financial Wealth Management. The ` was unable to verify whether he was among those arrested by police.
Evergrande did not immediately respond to a ` request for comment.
Under a plan announced Friday by China’s National Administration of Financial Regulation (NAFR), Evergrande Life Assurance’s assets and liabilities will be acquired by state-owned Haigang Life Insurance Co. Ltd. accepted.
Evergrande shares were down around 3% midday on Monday after recovering from a 25% loss in early trading.
Since 2020, Beijing has made it increasingly difficult for real estate developers to access credit.
Evergrande, once one of China’s largest companies, had accumulated more than $300 billion (£242 billion) in debt as it rapidly expanded.
The company is currently trying to restructure its business after defaulting on its debts and incurring massive losses.
Other major Chinese real estate developers, including Country Garden and Sino-Ocean, have struggled to repay their debts.
China’s real estate industry is an important part of the world’s second largest economy
Some experts fear that the crisis in the industry could destabilize the economy and spill over into global financial markets.
Beijing has also been cracking down on alleged corruption in the country’s financial sector for more than two years.
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