Securities brokerage declared bankrupt
By Hu Yuanyuan (China Daily)
Updated: 2006-08-18 09:07
China Southern Securities Co Ltd, once the country's fifth-largest brokerage,
has been declared bankrupt after years of struggle, making it the country's
largest securities bankruptcy case.
"The move is part of China's efforts
to clean up the securities brokerage sector," He Yuanyuan, an analyst with CITIC
China Securities, told China Daily.
China Southern Securities' debts
exceeded its assets by 12.2 billion yuan (US$1.53 billion), the Shenzhen
Intermediate People's Court stated in its ruling on Wednesday.
According to
an audit report by accounting firm Deloitte, China Southern Securities' total
debts reached 22.8 billion yuan (US$2.85 billion) by the end of last year, while
its total assets were 10.6 billion yuan (US$1.3 billion).
The Shenzhen
Lanbowan Investment Co took China Southern Securities to court on July 7, asking
the brokerage to pay back its overdue 30 million yuan (US$3.75 million)
debt.
"The bankruptcy and clearing helps to protect the interests of
investors and creditors," said Guo Yimin, deputy dean of the Shenzhen
Intermediate People's Court.
"This move also rings an alarm bell for
securities firms to strengthen their corporate governance and risk
management."
Industry sources disclosed that clauses on the closure of
securities firms have been included in a draft law on bankruptcy to standardize
the practice. And now all legal and technical hurdles for the bankruptcy of
brokerages have been cleared.
China Southern
Securities is the second Shenzhen brokerage to be declared bankrupt after
mid-sized Eagle Securities went bust in January.
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