CITIC Group

Businesses

Its initial aim was to "attract and utilize foreign capital, introduce advanced technologies, and adopt advanced and scientific international practice in operation and management."^[8] It now owns 44 subsidiaries including China CITIC Bank, CITIC Limited, CITIC Trust and CITIC Merchant (mainly banks) in mainland China, Hong Kong, the United States, Canada, Australia and New Zealand.^{[citation needed]}

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History

Summarize

Perspective

CITIC Group was founded as the China International Trust Investment Corporation (Chinese: 中国国际信托投资公司; abb. CITIC), a Chinese state-owned enterprise in 1979. In the 1980s, Chinese government founded many for profit corporations, which CITIC was under the leadership of Rong Yiren, a former businessman and politician at that time, who chose to stay in the mainland China in the 1950s after his family business was nationalized.^[9] His son, Larry Yung,^{[nb 1]} was the former chairman of CITIC Group's listed subsidiary CITIC Pacific. Larry also led the Hong Kong office and parent company of CITIC Pacific since 1986; Larry became a Hong Kong–based businessman since 1978.^[9] Throughout the 1980s, Xiong Xianghui served as CITIC vice chair and significant CITIC leadership was drawn from the Intelligence Bureau of the Joint Staff Department.^[10]

CITIC Group headquarters was based in Beijing; Hong Kong office was formally opened in 1985.^[9] The mainland-based CITIC Bank was founded by the group in 1984.^[9] The group also acquired 12.5% stake of the Hong Kong flag carrier Cathay Pacific in 1987,^[9] and became a member of a shareholders' agreement in 2006;^[11] the stake was sold to fellow state-owned company Air China in 2009.^[12] The group also acquired Hong Kong–based Ka Wah Bank in 1986.^[9] In 1990, the group also absorbed some of the subsidiaries of another state-owned company, 中国康华发展总公司.^[13] Other notable acquisitions included 38.3% stake of another airline Dragonair, 20% stake of Hong Kong Telecom, etc.^[9]

CITIC also acquired a Hong Kong listed company and renamed to CITIC Pacific in the 1990s.^{[citation needed]}

2000s

Beginning in 2008, CITIC Group had the lead role in developing Quilamba in Angola as part of an exchange of Chinese construction materials and expertise for Angolan natural resources.^[14]^: 125

Its subsidiary, CITIC Pacific (Chinese: 中信泰富, now known as CITIC Limited), made unauthorized bets on the foreign currency market in October 2008 and lost HK$14.7 billion (US$1.9 billion, when accounted for in mark-to-market terms). Senior executives such as Financial Controller Chau Chi-Yin and Group Finance Director Leslie Chang resigned.^[15]^[16]^[17] Its stock price plunged 55.1 percent upon the resumption of trade.^[18]

In 2015, CITIC Group sold 10% stake of CITIC Limited to a joint-venture of Itochu and Charoen Pokphand for HK$34.4 billion (US$4.54 billion); the joint venture also subscribed new convertible preferred shares for HK$45.9 billion (or US$5.9 billion).^[19] It was reported it was the largest investment ever made by a Japanese general trading company.^[20] The transaction is also the largest acquisition in China by a Japanese company, and the largest investment by foreigners in a Chinese state-owned enterprise.^[21]

In 2023, China Huarong Asset Management, the company that manages the troubled assets, contracted to buy 5.01 percent of Citic Limited for HK$13.6 billion (US$1.7 billion). Huarong will acquire a stake from CITIC Group’s subsidiary, Citic Polaris. In addition, Huarong plans to change the name to China Citic Financial Asset Management. The deal is a return on the investment that CITIC invested in 2021, leading the rescue of Huarong.^[22]^[23]

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CITIC CEFC bond default

In November 2016, CITIC CLSA acted as the sole bookrunner for CEFC Shanghai's US$250 bond issuance. CITIC CLSA hid from the market that the bond deal was only 60% subscribed at pricing. It manipulated the bond price in the secondary market in an effort to offload the 100mm USD bond CITIC CLSA held on its balance sheet.^[24]

In May 2018, CITIC Group announced they would repay ca 450 million euros owed by CEFC Europe to finance and banking group J&T within days but since the debt was not paid a week later, J&T announced it had taken over shareholder rights and installed crisis management at CEFC Europe.^[25]^[26] Several days later, CEFC Shanghai defaulted on $327 million in bond payments, and offered to make the payments six months after the maturity date.^[27]

In October 2020, some retail CEFC bondholders in Hong Kong filed a complaint to the Securities and Futures Commission in Hong Kong against the bond's sole underwriter CITIC CLSA.^[24]

Businesses

History

2000s

CITIC CEFC bond default

Group companies

Equity investments

See also

Footnotes

References

External links

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