Zhongzhi, troubled Chinese shadow bank, files for bankruptcy

News Snapshot:

While the firm’s creditors are mostly wealthy individuals rather than financial institutions — limiting the direct impact on the financial system — the collapse exposes potential cracks in the $US2.9 trillion trust sector. The failure also highlights the risks of the rapidly growing global private credit market, where the lack of public disclosure on debts raised outside the banking system is one of its defining traits. In recent years, even as rival trusts pared risks, Zhongzhi and its affiliates, especially Zhongrong International Trust Co, extended financing to troubled developers and snapped up assets from companies including China Evergrande Group. China’s...