China Huarong Plans to Restructure Overseas Operations
China Huarong Plans to Restructure Overseas Operations
(Bloomberg) -- China Huarong Asset Management Co., the state-owned bad-debt manager whose former chairman has been embroiled in a graft probe, plans to restructure its overseas operations in a bid to cut costs, people with knowledge of the matter said.
The company is targeting reductions of more than 50 percent in staff-related costs at its businesses in Hong Kong and other markets outside China, according to two of the people. Options being discussed involve cutting jobs and pay, said one of the people, who asked to remain anonymous discussing confidential information.
Operations in China won’t be affected, another person said.
Huarong is grappling with bloated costs after Lai Xiaomin, who resigned as chairman in April, rushed to expand overseas, the people said. Total assets ballooned sixfold to 1.87 trillion yuan ($282 billion) in the five years through December, according to data compiled by Bloomberg. Huarong shares touched a record low on Friday.
Huarong’s woes coincide with a meltdown in Chinese stocks sparked by the nation’s escalating trade frictions with the U.S. In April, the Financial Times reported that some of its employees in Hong Kong were ordered to surrender their travel documents as the corruption investigation reached outside mainland China. Huarong was one of four companies set up by the government in 1999 to help clean up a banking system plagued by bad debts.
The company had 12,520 employees at the end of last year, according to its annual report, which didn’t provide a geographic breakdown of headcount. Huarong officials didn’t immediately respond to an email seeking comment on the move.
To contact Bloomberg News staff for this story: Fox Hu in Hong Kong at fhu7@bloomberg.net;Steven Yang in Beijing at kyang74@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.net;Jun Luo in Shanghai at jluo6@bloomberg.net
To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net, Divya Balji
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With assistance from Editorial Board