Is there still a chance for trust companies to make big money?

Last week, the supervisory leaders launched an attack at the annual meeting of the trust industry. The main theme was that "the trust industry must put an end to the mentality of gaming with supervision." The severity of the speech did not stop there. "Opportunism" ", "reckless culture" and "disrupting macro-control", a series of fierce words have given a serious characterization of the trust industry's performance in the past ten years from a regulatory perspective. At the end, the leader proposed "earning refreshing money" and "the trust industry must establish the concept of earning hard-earned money." At this moment when winter has entered, this poured a basin of ice water on practitioners, and many trustees felt that Despair like never before.

After reading the news, Mr. C, an old classmate of the fund company, hurriedly sent me a WeChat message, "Is this the supervision telling you to have a correct attitude towards eating S?", I replied with a wry smile. "Well, that's right, maybe we are also required to express our opinion after eating, how delicious it is..."

As a veteran who entered the trust industry in 2011, I have witnessed the full implementation of the new asset management regulations. , I also feel the sharp and sharp cruelty of Document No. 64, and the draft of the "New Capital Regulations" is like the sword of Damocles, hanging over the head of every trustee. Will trust companies, which are accustomed to making big fortunes in silence, return to mediocrity? Is the trust industry really running out of "money paths"? Can trust companies make big money?

1

A company without value has no "money path", and trust companies must create new value

Political economy tells us that value determines price, and Prices fluctuate around value. Isn’t this true for today’s trust companies? After the real estate and bank-trust cooperation derived from the background of regulatory arbitrage slowly withered away, the "arbitrage" value of trusts continued to decline, and if trust companies could not make achievements in the creation of new value, they would naturally have no consideration and suffer. The day is really coming.

The most distressing thing for trustees right now is that whether it is a service trust or a standard product trust advocated by supervision, either the work is heavy and the price is low and does not make money, or they are not good at it, and their lives of indulgence and extravagance have become a waste of money. A simple home-cooked dish, let alone eating it, feels bland even thinking about it.

As the new year approaches, we will see various research reports on the trust industry, but most of Chen Chen Xiangyin’s words are superficial understandings of regulatory intentions and have not been truly implemented. "The wind rises where the wind blows", I try to talk about my views on value creation by trust companies by analyzing the subtle changes that are taking place in the industry, combined with the guidance of supervision. In short, how do trust companies " Make big money”.

I want to condense the core content into two sentences, and put the outline at the beginning of the article. The first half of each sentence is Vice Chairman Huang’s original words, and the second half is my personal extended understanding.

1. Give full play to the institutional advantages of trust companies in both investment and financing, provide enterprises with comprehensive financial solutions at different stages of development and under different financial demand scenarios, and take the path of specialization and refinement - "Trusts must fully Take advantage of cross-market advantages";

2. The professional level of asset management capabilities must be improved - "To win both ends of the smile curve, professionalism comes first."

2

How can trust companies “give full play to the institutional advantages of trust companies in both investment and financing”?

Seniors in the industry have long pointed out that the trust industry spans currency, industry and capital markets and has special advantages unparalleled by other financial institutions. If we carefully read Vice Chairman Huang’s speech on December 8, we suddenly discovered that It reads like this: "Leverage the institutional advantages of trust companies in both investment and financing to provide enterprises with comprehensive financial solutions at different stages of development and under different financial demand scenarios, and to take the path of specialization and refinement." Although the two expressions are different , but the core idea is the same, that is, the cross-market solution capabilities of trust companies will be the foundation for the trust industry to continue to gain a foothold in the domestic financial circle.

In practice, many companies have begun to try to solve problems on the concept of "cross-market" and have achieved good results. Taking the issuance of convertible bonds as an example, everyone knows that under the turbulent conditions in the capital market this year, convertible bonds have also become very popular, and the issuance of convertible bonds has become a business that is sure to make a profit, but if you are careful, Friends will find that compared to Snowball and multi-strategy FOF, there are very few new related products for convertible bonds.

The reason is very simple, because there are more wolves and less meat, the winning rate is too low, resulting in a low comprehensive rate of return, and there is no ability to productize it. However, some institutions have discovered a secret door, that is, through preferential allotment of existing shareholders to greatly increase the allocation ratio, and through a simple combination of non-standard and standard products to achieve a win-win situation for the trust and major shareholders:

< p> (1) Premise: We are sure that convertible bond renewal has stable and common excess returns;

(2) Model: Find those major shareholders with insufficient own funds and confirm the agreement to increase credit method, fixed interest rate and income sharing mechanism, and input funds into it through income rights;

(3) Income: Major shareholders participate in the placement of convertible bonds, sell them as soon as they are listed, realize the income, and the trust company gets The principal and part of the excess returns are returned, and the major shareholders also get a share of the pie even though they have no money.

In fact, this model is a simple organic combination of "industrial credit + capital market". The bank's credit review is strict + the capital market is missing, while securities firms have no credit function, and the trust channel business is strictly suppressed. Under such circumstances, it is very difficult for banks and securities firms to practice "cross-market" capabilities through "borrowing channels". In this model, trust companies have unique competitive advantages. Trust companies use limited non-standard quotas and use non-standard flexibility to leverage capital market business and establish cross-market competitive advantages. I think there is still a lot of room to make money. Similarly, trust companies cooperate with major shareholders of listed companies in industrial funds on their main business, and agree to inject private capital into listed companies to achieve exit. This is also a successful case of non-standard + standard.

As the Yongmei incident continues to ferment, many companies with acceptable quality have also been accidentally killed in the panic of the market. Can trust companies use trust plans to donate blood to high-quality targets that have been accidentally killed? The funds are used to purchase low-price bonds and maintain the market credibility of the bond issuer. Compared with direct crisis investment, we can set up more risk control measures at the trust plan level, with slightly lower returns but better security. Of course, the above-mentioned model is just a personal idea, and there are still many areas that need further improvement in details. However, I believe that trust companies have huge room to play in areas such as private placement and large-scale reduction of holdings.

There are essentially three key points to bring the divergent views back together and give full play to the cross-market advantages of trust companies:

1. Establish a business philosophy with the capital market as the core: Economic structure Fundamental changes have occurred, and trust companies can only break out of the past and follow the trend;

2. The core of converting non-standard products to standard products is not to deliberately make standard products. Trust companies must give full play to their ability in non-standard products. Only by leveraging the advantages in the standard field and radiating the standard business can we win our own living space in the battle with securities firms and funds. A trust company that clings to non-standard products can only die of thirst in the dry desert. To engage in standard products without non-standard products is like water without a source for trust companies!

3. The creation of any new model is not the product of whims, but comes from the in-depth exploration and personalized customization of customer needs. By utilizing the combination of "non-standard + standard" and meeting the individual needs of financiers, trust companies will definitely develop more interesting new models and create new value that is different from banks and securities firms.

3

Continue to explore value from both ends of the smile curve and obtain more profits from the traditional standard business

If you pay attention to each trust According to the company's recruitment information, the bond bidding team is the focus of each company's human resources work. The bond bidding business seems to be easy to scale up, and it is directly beneficial to solving the problem of the high proportion of non-standard bonds in trust companies, but the question is, where does the money come from? We have all seen Shanghai Trust’s tens of billions of cash profits, but we have ignored the reputation and customer base formed by this product’s stable operation for more than ten years.

In the transformation period of the industry, every company is eager to get it right in one step, but always ignores some basic common sense. The industry is moving, but more of it is blind and restless. I think that if trusts want to make tricks on traditional standard products, they must find a way along both ends of the smile curve, either to improve their wealth management capabilities, or to test the water by becoming an investment manager themselves, no matter how many I think any exploration is valuable whether strategic FOF should carry out non-standard substitution or follow the model of Yun Guotou to cultivate its own equity investment team.

Let’s talk about wealth management capabilities first. Vice Chairman Huang spent a lot of space describing it, but I think most trust companies have a poor understanding of wealth management capabilities. Many trust companies are still intoxicated with non-profit management capabilities. In the direct sales scale of tens of billions or even hundreds of billions in the standard era, as everyone knows, in the future of drastic changes in the industry, when non-standard products become increasingly scarce, and when trust wealth needs to use standard products as its main products, the customers of the trust wealth center Is the manager capable of fighting against banks, securities firms and third-party wealth managers?

Non-standard is the foundation for the rapid development of trust wealth in the past, but it has also become a shackles for trust wealth. Products with the secret of slaying dragons make marketing unfavorable, and customers can be acquired without too much effort. Happy, but it limits the ability building of account managers in the long term. If the wealth center of a trust company cannot get rid of its reliance on non-standard products, embrace the standard products and equity markets, and win the trust of customers with its professional capabilities, what is the difference between trust companies and third-party wealth selling standard products in the future?

On the asset side, trust companies have focused their recruitment on front-office teams, hoping to create an independent department in addition to non-standard teams to promote the development of standard trusts. But I think that if the company as a whole does not improve the company’s awareness of the standard product business, especially the management’s attention, and does not build a dedicated standard product business risk control team, it will be difficult to have a real standard product business in the trust company. For trust companies, the standard product business is not a partial transformation, but an overall restructuring of thinking.

The concept of the smile curve is easy to understand, but the capacity building of trust companies is a systematic project. It starts with concept change, flourishes with organizational restructuring, and ends with professional capacity building. As onlookers, we will find that this professional ability is not only projected on the investment management ability on the asset side, but also on the asset allocation ability of wealth center marketing, just as the supervision mentioned "improving professional asset management capabilities" and "improving Comprehensive management service capabilities."

4 Written at the end, a message for the future

Returning to this seemingly hopeless reality, the possible truth is that the overall opportunities in the trust industry have gradually faded away, but I I'm not particularly pessimistic about this. Sometimes, the trough of the industry just gives practitioners more time to think. In a lonely environment, the insights gained from hard thinking may be of greater value when the wind blows again. This This is what history tells us.

As for industry changes, I think this is an opportunity for many outstanding companies or individuals to achieve overtaking in a corner. When the overall β of the industry is no longer, α is the decisive force for the performance of this market. In the severe environment of economic transformation and strict regulatory control, outstanding companies and people will stand out at a faster speed, and the gap between actions and inactions will become more prominent. This situation may be more worthy of our embrace.

As for whether trust companies can still make big money? I guess that depends on how much real value is created by the trust company, but also by the individual.

Don’t let a good crisis go to waste!

This article comes from a trust insider