Bulletin: China Huarong's Government Support Won't Diminish With MOF's Smaller Direct Stake

HONG KONG (S&P Global Ratings) March 31, 2022—We believe China Huarong Asset Management Co. Ltd. will continue to receive strong government backing and support, despite CITIC Group Corp. replacing the Ministry of Finance (MOF) as the company's largest direct shareholder. Our view has not changed regarding government support for China Huarong (BBB/Negative/A-2). We see the distressed asset manager as a government-related entity with a very high likelihood of receiving extraordinary government support. Moreover, the new largest shareholder is also state-owned. MOF effectively 100% owns CITIC Group (BBB+/Positive/A-2), and therefore remains the ultimate controlling shareholder of China Huarong. CITIC Group is unlikely to be heavily involved in China Huarong's strategic direction and operations over the next 12-24 months. We note that

...March 30, 2022 HONG KONG (S&P Global Ratings) March 31, 2022--We believe China Huarong Asset Management Co. Ltd. will continue to receive strong government backing and support, despite CITIC Group Corp. replacing the Ministry of Finance (MOF) as the company's largest direct shareholder. Our view has not changed regarding government support for China Huarong (###/Negative/A-2). We see the distressed asset manager as a government-related entity with a very high likelihood of receiving extraordinary government support. Moreover, the new largest shareholder is also state-owned. MOF effectively 100% owns CITIC Group (###+/Positive/A-2), and therefore remains the ultimate controlling shareholder of China Huarong. CITIC Group is unlikely to be heavily involved in China Huarong's strategic direction and operations over the next 12-24 months. We note that the distressed asset manager will not be consolidated into CITIC Group's financial statements at this stage. China Huarong's operating performance...

Bulletin