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Wanzi Long Article: Four Transitions in the History of Japanese Trust Industry and Their Enlightenment to China

Release Time:2021-07-20 Topic:Japanese stock trading rules Reading:11 Navigation:Stock Liao information > Comprehensive > Wanzi Long Article: Four Transitions in the History of Japanese Trust Industry and Their Enlightenment to China phone-reading

The author of this article is a researcher at the China Construction Investment Research Institute

Since the enactment of the Trust Law and the Trust Industry Law in Japan in 1922 It has been operating trust business for nearly a hundred years. At present, Japan has a complete trust system, a wide range of trust applications, a rich variety of trust products, and a mature trust industry, which has realized the popularization and modernization of trusts. As of the end of 2020, the scale of Japanese trust assets is as high as 1,327 trillion yen, and China only has a quarter of that. The century-old development history of the Japanese trust industry has not been smooth sailing. It has undergone many transformations during this period, and it has achieved today's achievements. Stones from other hills, can learn. Studying the transformation and development process of Japan's trust industry will surely have a very important reference for the current transformation of China's trust industry.

The standardized development and transformation that began in 1922

(1) The background of the transformation

Japan’s formal introduction of the trust system began in 1905. The Trust Law was enacted as a sign. The background of the era was that Japan was in a period of economic recovery after the end of the Russo-Japanese War and the transition from light industry to heavy industry, and it urgently needed to attract foreign capital; and the stock company at that time did not have high credibility. For the purpose of increasing the creditworthiness of corporate bonds, facilitating foreign capital financing and reducing costs, all corporate creditors’ security rights are trusted, and the trustee manages the custody and enforcement of the security rights in a unified manner. In this way, a trust system targeting companies was first established in Japan.

However, the guaranteed corporate bond trust business is only allowed to be undertaken by banks, and it has not been widely developed. Later, due to the economic improvement in Japan brought about by the First World War, a large number of trust companies began to be established. By the end of 1921, there were 488 trust companies nationwide and the trust business expanded to more than 30 varieties. However, the capital strength of most trust companies is weak, and trust abuse is very common. A large number of real estate intermediaries, usury, stock trading, and litigation are all carried out under the name of the trust. Most trust companies use loan sharking as their main source of income, and trusts are seen as an industry without social credit. After 1920, along with the economic recession, the hidden ills of the initial development of the Japanese trust industry gradually exposed, and it is not uncommon for trust companies to close down. In view of the chaotic situation in the trust industry, the Ministry of Finance and Economics of Japan initiated industry rectification work aimed at industry regulations and using legislation as a means.

(2) Institutional Arrangements for Transformation

1. Formulate the Trust Industry Law and Trust Law

1920, Ministry of Finance, Japan The Ministry of Justice and the Ministry of Justice respectively led the drafting of the Trust Industry Law and the Trust Law. After the two bills were discussed by the Legislative Council, they were finally issued on April 21, 1922, and came into force on January 1, 1923.

The main institutional arrangements of the two laws are as follows: One is to clarify the legal definition of trust. In the trust law, the general legal concept of trusts and the basic principles of trust-related laws are clarified.

The second is to establish a business license system. The policy adopted by the government is limited to issuing business licenses to trust companies with excellent creditworthiness. The trust law clearly stipulates that the minimum registered capital of a trust company is 100 million yen. Those who do not meet the conditions shall not use the name of the "trust company".

The third is to define the scope of business, trust and bank operations are separated. The Trust Industry Law stipulates that trust companies shall not concurrently engage in banking business. After that, the Banking Law implemented by the Japanese government in 1928 also stipulated that commercial banks must not engage in trust business other than the secured corporate bond trust business.

2. Positioning the main business of trust companies in the long-term financing function

In order to balance the development of the trust industry and the banking industry, avoid direct competition, and at the same time For the purpose of restricting trust, the Ministry of Finance of Japan, when issuing business licenses to trust companies, stipulated that the trust period of money trusts should not be less than 2 years (later changed to more than 1 year), and the initial amount of purchase of a trust plan should not be less than 500 days. yuan. However, in actual operations, 5-year money trusts basically accounted for more than half.

In 1931, the Japanese government divided money trusts with a five-year period. Five years or more is long-term, and five years or less is short-term, but it is more inclined to medium and long-term, which is more conducive to the absorption of long-term and stable funds. Aided by the accumulation of funds, trust companies began to highlight the function of long-term financing, complementing each other with banks that perform short-term financing functions.

(3) The effectiveness of the transformation

1. The trust market has been standardized and the industry concentration has increased substantially

The Ministry of Finance has adopted a strict licensing approval policy. Many small and medium-sized trust companies have merged or went bankrupt. As of the end of 1924, only 27 trust companies had obtained business licenses. Compared with 1921, the number of trust companies had dropped by 94%. The goal of the Ministry of Finance to improve the creditworthiness of trust companies has been realized, and the concentration of the trust industry has increased significantly.

2. Formed the main business of money trust with long-term financing function

After the First World War, Japan changed from a chronic debtor country to a creditor country. The economic structure has changed from an agricultural country to an industrial country. On the one hand, the demand for entrusting property to professional institutions for management and use has increased as the number of property owners has increased. On the other hand, the long-term capital needs of industrial enterprises have increased significantly. At this time, the money trust, which is positioned as a long-term financing function, just met the needs of both and achieved rapid growth. According to statistics, at the end of March 1929, the total amount of Japanese trust assets was 1.268 billion yen, which was 1/8 of the total deposits of Japanese banks at that time. Among them, the total amount of money trust assets was 1.004 billion yen, accounting for 73%. Due to the rapid development of the money trust business, the total amount of trust property entrusted by the Japanese trust industry has also been increasing. It was 100 million yen in 1924, increased to 1.26 billion yen in 1928, and 2.2 billion yen in 1936.

Transformation of the mixed operation of trust and bank operations in 1948

(1) The background of the transformation

1. The wartime economic system caused confusion in the functions of the Japanese trust industry

During World War II, the Japanese government implemented financial regulations in order to quickly concentrate various funds, raise a large amount of military expenditure, and strengthen the control of the direction of bank loans and interest rates. Regarding the trust industry, the first is to give trust companies the role of absorbing deposits and lower the investment threshold for trust business customers. In 1937, the entry threshold for money trusts was reduced from 500 yen to 50 yen, making trust companies more of the same role as banks. The saving function of Japan opened the prelude to the chaotic function of the Japanese trust industry. The second is to further increase the industry concentration and start the clean-up and rectification of trust companies by means of reorganization and merger; as of the end of 1940, there were only 21 trust companies remaining. The third is to further strengthen the wartime capital control and allow banks to operate concurrently in trust business; the enactment of the Concurrent Operation Law in 1943 prompted banks to absorb and merge trust companies. By the end of 1945, there were only 7 professional trust companies left in the trust industry, and concurrently operated trust companies. There are 11 banks in business.

2. Severe inflation in the early post-war period made the trust business unsustainable

In the early post-war period, the Japanese government adopted a tilt for economic recovery The mode of production caused severe inflation. At the same time, due to the reform of agricultural land, the revision of the Land Lease Law and the Housing Lease Law, and the promulgation of the Property Tax Law, the chaebol collapsed and the landlord class and wealthy class in Japan inevitably declined Up. The trustee's entrustment demand in the trust relationship is shrinking day by day, the business of the trust company is in a dilemma, and it is facing extreme difficulties in operation. At the same time, Japan learned from the Securities Exchange Law enacted by the United States to not allow trust companies to conduct securities undertaking business, which further deteriorated the operating conditions of trust companies.

The trust company tried to resurrect in the difficult situation. In 1947, it revoked the five-year period of moneyBanks like to use short-term funds to save money to seek a turnaround, but they are still in vain. It is said that in the end they can only rely on the sale of lottery tickets to make ends meet.

(2) Institutional Arrangements for the Transformation of Trust Banks

In order to revitalize the trust industry, the Japanese government accepted the recommendation of the United Nations General Command in Japan in 1948, referring to American trust practices, Let the trust company concurrently operate commercial banking business, in order to increase the source of profits of the trust company. However, allowing trust companies to concurrently operate commercial banking business is contrary to the provisions of the Japanese Trust Industry Law on separate operations. At that time, the Japanese government did not directly amend the Trust Industry Law to achieve this. Instead, it asked the trust company to return the trust business license in accordance with the Trust Industry Law, and then obtain the ordinary banking license in accordance with the Banking Law, and at the same time obtain the concurrent operation under the concurrent operation law. Licensing of the trust industry. In August, the Japanese government promulgated the "Financial Institution Reconstruction and Maintenance Law", reorganizing trust companies into trust banks in accordance with the Banking Law.

(3) Transformation effectiveness

1. All trust companies transformed into trust banks

August 1948, except for one The trust company was transformed into a trustee securities investment trust (soon after it transformed into a securities company again), and the remaining six trust companies were all transformed into trust banks. At this point, all trust companies under the Trust Industry Law disappeared.

After this transformation, starting in 1949, Japan Trust Bank can absorb deposits like ordinary banks, and equivalently, ordinary banks can still continue to operate trust business. Since then, Japan has officially entered a mixed operation. era.

2. Get rid of the business crisis, but the business dilemma has not been reversed

According to statistics, in 1949, the bank deposits of these six trust banks exceeded the money trust’s In terms of transaction volume, it can be said that mixed operation has helped Japan's trust industry survive the crisis of survival to a large extent.

However, the operating dilemma of the trust bank after the transformation has not been reversed. Its banking business has just started, with few branches, difficult to raise funds, and no competitive advantage. The trust business is still very poor due to the continued inflation. Prosperity: Legal persons no longer entrust long-term use of funds, and individuals no longer have the space to use funds due to the freezing of the new yen.

The long-term financial function transformation from 1952-1953

(1) The background of the transformation

The transformation of the trust bank in 1.1948 was not successful

Affected by inflation, the transformed trust bank relied on short-term and high-profit strategies to attract funds. At that time, its main business was a separate use of designated money trusts with a term of 3-6 months (referred to as "designated money trusts"). Single”), which accounts for more than 80% of the entrusted assets. However, because this type of business had a competitive relationship with local banks and violated the low interest policy adopted by the government at that time, the supervisory authorities adopted almost prohibited operating restrictions.

2. The mixed operation of trusts and banks disrupts the financial order

Since the introduction of the Concurrent Operation Law in 1943, the mixed operation of finance has brought financial supervision A series of problems such as multiplicity, financial risk chain, financial business chaos, deteriorating financial competition and so on. Quite a lot of trusts run bank accounts with bank accounts and trust accounts, and use money trust funds for special products such as bank deposits. Not only has it become an important factor in disrupting financial order, it has actually negated the original function of the trust, which is important for the development of the trust industry. Caused a negative effect.

3. The government suspended the financial arrangements for the restoration of industry in the early post-war period

In order to curb the severe post-war inflation, the Japanese government adopted fiscal measures in 1949. The financial austerity policy categorically stopped the use of the Renaissance Financial Treasury to restore industrial financial system arrangements in the early post-war period. As an alternative, a special U.S. aid counterpart fund has been established to use the Japanese yen income from U.S. aid imports to provide loans for long-term industrial projects. But after a year of implementation, the government found that this kind of investment was far slower than drawing money from consumers' pockets at rising prices. At this time, as the economy improves, basic industries such as steel, coal, and heavy chemical industries have huge funding gaps and urgent needs.

4. A large amount of idle funds of residents were not stored in banks

In February 1946, the Japanese government adopted a "replacement of new funds" in response to soaring inflation. "Japanese yen" and "deposit blockade" policies, that is, the issuance of new Japanese yen to replace the old Japanese yen, and restrictions on the withdrawal of deposits from banks. This policy directly led to the weakening of residents' willingness to save. A large amount of idle funds in the hands of residents were not stored in banks, and it was difficult for the government to mobilize savings through banking institutions to support the development of basic industries. At the same time, as mentioned earlier, the restrictions on financial products such as designated orders,People’s idle funds also lack channels for investment and appreciation.

(2) Transformation process and institutional arrangements

1. The trust industry proposes long-term loan product ideas to the government

In order to get rid of World War II In the post-economic turmoil period, the industry’s stagnant development and its reliance on short-term and high dividend-sharing trust products. At the same time, based on the analysis and judgment of the social financing needs and the flexible use of idle funds by residents, the trust industry proposed to the government to provide basic pillar industries in 1951. The idea of ​​long-term loan products and funding.

2. The Trust Industry Association proposes a loan investment trust plan

Based on the trust industry’s proposal, the Japan Trust Industry Association drafted the "Regarding Loan Investment Trust Discussion on the Implementation of the System" and submitted it to the Ministry of Finance, the President of the Bank of Japan, the Policy Committee of the Bank of Japan, the Chairman of the House of Representatives of the House of Representatives, etc.

3. Formulate the Loan Trust Law

Only about half a year after the Trust Industry Association’s proposal, in June 1952, the Japanese government promulgated and implemented the loan Trust law. The law locks the loan trust business in the purpose of providing long-term and stable funds (with a trust period of more than 2 years) "for resource development or other important industries", and enjoys a special agreement to compensate the principal and a special agreement to supplement interest.

4. Re-establish financial division of operations and position trust banks as long-term finance

In June 1953, the Ministry of Finance and Economics of Japan proposed the "Separation of Long and Short" , The financial division business model of “separation of bank and letter, separation of bank and securities, and separation of size”. There are three kinds of "separation" directly related to the trust industry. Among them, the “separation of long-term and short-term” clarifies the separation of long-term financial business from short-term financial business; short-term financial business (within one year) is operated by commercial banks, mainly providing short-term capital loans to non-financial enterprises; long-term financial business (more than one year) The operations of credit banks and trust banks are mainly to provide long-term loans such as equipment investment to non-financial corporations. "Separation of banking and trust" clearly clarifies the separation of banking business from trust business. Generally, banks are not allowed to operate trust business, and only trust banks can carry out trust business. "Separation of size" clarifies the separation of financial institutions between large and small enterprises, and trust banks mainly carry out financing and loan activities for large enterprises.

(3) Transformation effectiveness

1. At the institutional level, the trust bank’s franchise business has been established

Under financial administrative intervention, the original trust business that the bank could concurrently operate in accordance with the "Concurrent Operation Law" was separated and was not allowed to operate concurrently. The trust department of the bank was transferred to the original trust bank or reorganized separately into an independent trust bank. By 1957, among the 11 banks that concurrently engaged in trust business, 7 local banks had ceased their trust business, and 3 city banks transferred their trust business to 2 newly established trust banks. With the exception of Daiwa Bank, trust professionalism Achieved. The loan trust business has become the exclusive business of trust banks for long-term financing of large enterprises. The market share of trust banks and commercial banks has taken shape.

2. Loan trust has become the main business of the trust, and the trust is popularized

The Loan Trust Law will formalize and miniaturize money trusts, allowing trust banks to obtain New customer base. And because of the high security, high profitability, and income tax benefits of loan trusts, it has achieved development beyond imagination. According to statistics, at one time, more than 7 million households in Japan participated in loan trusts, and the number of trustees was more than that of the United States, which has the most developed trust industry. By 1965, the loan trust balance reached 2,192.7 billion yen, nearly a thousand times larger than the scale before World War II. The trust bank centered on loan trust business, and it took more than 10 years to expand the market scale in one fell swoop and establish the trust industry's position in the Japanese financial world.

The transformation based on the function of beneficiary rights conversion started in 1992

(1) Transformation background

1. Japan has entered the era of abundant capital , Corporate financing with low interest rates became possible

The sharp appreciation of the yen after the "Plaza Accord" in September 1985 led to a slowdown in Japan’s export growth. The Bank of Japan began to intensify its financial easing policies and continued to lower the benchmark. The interest rate fell to 2.5%, the lowest post-war level in February 1987, and the increase in the money supply reached a double-digit rate. Low-interest-rate financing for companies became possible, and the loan trust business suffered a greater impact.

2. Financial liberalization promotes rapid growth of direct financing

In the 1980s, JapanWith the rapid development of the market, stock prices continue to rise, and it is easy for listed companies to obtain funds by issuing shares. Large companies began to reduce bank loans and switched to financing on the stock market. As restrictions on the issuance of corporate bonds begin to ease, more and more companies are issuing corporate bonds, convertible bonds, corporate bonds with warrants, short-term financing bills and other direct financing methods, not only from the domestic market, but also from the domestic market. Obtain funds in overseas markets. Loan trusts can be completely replaced.

3. The financing needs of companies have dropped sharply, and the demand for asset utilization has increased.

With the maturity of the Japanese industry’s highly developed industry, companies’ demand for funds is no longer It is as vigorous as the period of rapid economic growth. Enterprises have no capital needs, so they deposit funds obtained from the direct financing market with low interest rates into large-term deposits to obtain interest rate differentials; or use them to purchase specific money trusts, trust funds and other financial products to obtain investment and wealth management income.

4. The wave of residents "turning from saving to investment" is rising

In the second half of the 1980s, land prices in Japan began to soar, and stock prices also soared. In Japan, a huge wave of "shifting from savings to investment" has emerged. Residents' savings have mostly been invested in real estate, stocks, and asset management products centered on investment trusts. The circle of investors who prefer small amounts and high liquidity has increased significantly. The low interest policy implemented in the 1990s reduced the expected yield of loan trusts and gradually lost product advantages, resulting in a substantial reduction in the scale of loan trusts.

5. The bursting of the real estate and stock price bubble became the last straw to crush the trust bank

During the period of skyrocketing land prices and stock prices in Japan, the Japan Trust Bank’s Loan trust funds entered the real estate industry and financial service industries. In 1989, the scale of loan trust funds entering the real estate industry was 5,916.2 billion yen, and the amount of funds entering the financial industry was 6421.5 billion yen, both exceeding the historical high value of the investment scale of manufacturing funds ( see picture 1). At the beginning of 1990, Japanese stock prices began to plummet; in the second half of 1991, land prices began to fall rapidly; this caused a large number of real estate and financial institutions to go bankrupt, loan trusts formed huge amounts of non-performing claims, and the scale of loan trust business decreased rapidly after reaching the highest point in history in 1992 . For trust banks, what is more serious is that according to the provisions of the Loan Trust Law, such products must guarantee the principal and pay interest to investors after maturity, and trust banks are facing a severe operating crisis.

At this time, although other businesses such as annuity trusts and money debt trusts have developed, their proportion and profit contribution are far Lower than loan trusts; the profitability of land trusts and securities trusts has also deteriorated rapidly after the collapse of the bubble economy. Under the combined effect of these factors, the overall performance of the Japanese trust industry, which has been dominated by loan trusts since 1952, has fallen sharply, with huge losses for several consecutive years (see Figure 2), and its functional positioning with long-term finance as its core is unsustainable. The industry is facing another transformation.

6. After the burst of the bubble economy, the demand for asset liquidity began to prevail

Since the mid-1980s, Japan's demand for liquidity of credit assets began to arise. The first is that leasing companies and credit companies want to get rid of the indirect finance that has always relied on financial institutions for lending, and begin to realize fund allocation needs through the small sales of lease and credit claims. In 1988, due to the urgent requirements of Japanese financial institutions’ own capital ratios that must meet the international uniform standards, the liquidation of housing loan claims began.

Around 1992, Japanese stock prices and land prices plummeted, Japan’s bubble economy burst, a large number of corporate debts increased, credit ratings fell sharply, and corporate asset liquidity demand grew rapidly. Although the land price of real estate has fallen sharply at this time, the income of real estate itself has improved. Many companies have used buildings for conversion, optimized financial statements to improve credit ratings, and facilitated short-term financing. At the same time, real estate companies that are unable to repay the loan trust have mortgaged their real estate to the trust bank, and the trust bank intends to solve operating problems through real estate securitization. The government also hopes to resolve financial risks through asset securitization, so the demand for liquidity of lease claims, credit claims, general loan claims, and loan claims targeted at local public bodies has become more extensive. After 2000, the increase in the demand for off-balance sheet of enterprises and the diversification of the investment demand of institutional investors have led to the popularization of real estate mobility.

(2) Transformation process and institutional arrangements

1. The trust industry actively promotes asset liquidity-related businesses

While the loan trust business is shrinking rapidly, annuity trust, land trust, securities trust and other businesses are affected by the plunge in stock prices and land prices, and their performance has fallen sharply. According to statistics from the Japan Trustees Association, in 1990, the trust industry’s recurring income was 7.42 trillion yen, and its net profit was 209 billion yen. In 1992, it fell to 5.33 trillion yen and 66.2 billion yen, a decrease of 28% and respectively. 68%.

In order to improve this situation, the trust industry is based on its own real estate professional advantages (with real estate industry licenses and appraisers, traders and other real estate experts), years of experience in land trusts, and the value of real estate at the time. Judging, and actively submitting applications to the government for the development of real estate and other asset securitization businesses. On the one hand, this move can partially resolve the risks of loan trust business and expand new business sources; on the other hand, after real estate and other assets are securitized, it can increase the scope of annuity investment, thereby improving the performance of annuity trusts.

2. Regulatory authorities recognized the trust method for the liquidation of loan claims

In December 1992, the Ministry of Partial amendments have been made to the countermeasures against free capital ratios, and the liquidation of general loan claims has been recognized in the form of trust. In December 1994, the Ministry of Finance revised this policy again, encouraging the liquidation of loan claims for local public bodies to take the form of trust.

3. The government enacted a specific creditor’s rights law to reduce the practical burden of the liquidation of creditor’s rights

According to the provisions of Article 467 of the Japanese Civil Law, the creditor’s rights are transferred The requirements for confronting the debtor and the third party must be met. However, in the practice of the liquidation of monetary claims, there are often cases where a small majority of claims are collected and transferred. If the requirements for confrontation are to be met, there are objective obstacles in actual operation. To this end, Japan promulgated and implemented the "Laws Related to the Regulation of Certain Creditor's Rights and Other Undertakings" in June 1993, stipulating that specific creditor's rights such as leasehold and credit creditor's rights can be made in the form of public announcements. This law has made an epoch-making contribution to reducing the practical burden of the liquidation of creditor's rights.

4. Amend the Securities Exchange Law to include the beneficiary rights of residential loan credit trusts as trading objects

In 1993, Japan amended the Securities The beneficiary rights of creditor's rights trusts are recognized as securities under the Securities Exchange Law, thus expanding the asset liquidity market.

5. Formulate laws related to the liquidation of real estate

In September 1998, Japan implemented the “Law on the Liquidation of Specific Assets of Special Purpose Companies” (SPC Law), "Complete related laws and other relevant laws at the time of the implementation of the Law on the Liquidation of Specific Assets of Specific Purpose Companies", the liquidation system with real estate as the target was established, and the establishment of special purpose companies was lifted. However, the law has many restrictions in principle. It was amended in May 2000 and renamed the "Asset Liquidation Law" (corrected SPC law). The SPC Law is amended to expand SPC’s liquidity target assets from the previous trust beneficiary rights such as monetary claims and real estate to all property rights.

In 2000, the Japanese government revised the "Securities Investment Trust and Securities Investment Legal Person Law", abolished the word "securities" in the original law, and changed its name to the "Investment Trust and Investment Legal Person Law." The revised law expands the scope of application of investment trusts to assets in multiple fields including real estate, the establishment of a real estate investment legal person to lift the ban, and the asset liquidity market is further expanded.

(3) Transformation effectiveness

1. The field of application of asset liquidity trust is rapidly expanding, and the scale of trust is growing rapidly

in Japan Under the joint promotion of the trust industry and the government, asset liquidity trusts quickly expanded from lease claims and credit claims to various types of monetary claims, including residential loan claims, general loan claims, loan claims for local public bodies, and bill claims. , Credit sales on credit, etc. After 2000, real estate trusts became popular. J-REIT was listed for the first time in 2001, followed by residential franchise (2004), logistics facility franchise (2005), hotel franchise (2006), industrial infrastructure franchise (2007), and health care facility franchise (2014). In 2017, REIT obtained hospital real estate.

With the rapid expansion of application areas, the scale of asset liquidity trusts has grown rapidly since 1995 (see Figure 3), reaching 62.7 trillion yen in 2007, exceeding the historical high of loan trusts. In recent years, the scale of this type of trust has continued to grow, reaching 9% by the end of 2020.1.1 trillion yen.

2. The overall scale of the trust industry continues to grow, and its operating performance stabilizes after 10 years

Due to the rapid growth in the scale of asset liquidity trusts, the overall scale of Japanese trust industry trust assets has not been greatly affected by the rapid decline in the scale of loan trusts. On the contrary, there was a slight increase in 1993-1998, and after 1999 Rapid growth, as of the end of 2019, trust assets reached 1,260 trillion yen, 6.3 times that of 1992 (see Figure 4).

Judging from the performance of the trust industry, after 10 years of substantial fluctuations and adjustments, recurring income and net profits began to stabilize in 2003 (see Figure 4), and net profits began to turn losses into profits. Since then, recurring income has basically stabilized at around 2 trillion yen, while net profit has basically remained at around 300 billion yen, surpassing the level of the early 1990s, except for a few years affected by the 2008 financial crisis.

3. The industry concentration is further improved, and the scale effect is greatly improved

In 1999, the third-ranked Mitsui Trust Bank and the sixth-ranked Central Trust Bank merged to form Chuo Mitsui Trust Bank; in 2000, the Daiichi Kanye Bank, Fuji Bank and Japan Industrial Bank merged to form Mizuho Financial Holdings Group; 2001 , Mitsubishi Trust Bank, Japan Trust Bank and Bank of Tokyo-Mitsubishi merged into Mitsubishi Tokyo Financial Holdings Group; In the same year, Toyo Trust Bank merged with Tokai Bank and Sanwa Bank to form Japan United Financial Holdings Group; in 2005, Mitsubishi Tokyo Financial Holdings Group and Japan United Financial Holdings Group once again merged to form Mitsubishi UFJ Financial Group; in 2009, the First Quanye Fuji Trust Bank, Daiwa Bank Trust Bank and Daiwa Bank merged to form Lisona Bank; in 2011, Chuo Mitsui Trust Bank and Sumitomo Trust Bank merged again It is Sumitomo Mitsui Financial Holdings Group. So far, the Japanese trust industry has formed a pattern of four oligarchs: Sumitomo Mitsui, Mitsubishi UFJ, Mizuho Financial, and Resona Bank.

On the basis of the substantial increase in industry concentration, the scale effect of the Japanese trust industry has emerged, and the trust asset expense ratio (recurring expenses/trust asset scale) has dropped rapidly (see Figure 5), after 2003 Basically maintain the level below 0.3%.

4. The three-division pattern of trust business has been formed, and the transformation of trust functions and business models has been successful

After this transformation, with the rapid growth of asset liquidity trust business, it has not only expanded the field of trust function utilization, but also enriched the investment scope of annuity trusts, money trusts, and foreign trusts. The two promote each other , Which has greatly improved the pattern of Japanese trust business. The core function of the Japanese trust industry has changed from a single long-term finance to an equal emphasis on asset management, asset liquidation and asset utilization (see Figure 6).

Under the new business structure, the Japanese trust industry has completely transformed its core business of loan trust to earn loan interest. The business model is the main source of revenue, but it takes asset management as the core service and obtains income through management fee income + excess income commission. Under this model, the rate of return on trust as management fee income has dropped significantly (see Figure 7), and trust banks have achieved economies of scale by increasing the scale of trust assets.

A summary of the four transformations of the Japanese trust industry

1. The core of the decision to transform is to resolve risks

Looking back on the four transformations of the Japanese trust industry, we find that the fundamental reason for the transformation is not the needs of business development or changes in social needs, but the resolution of risks. The first transformation in 1922 was to resolve the systemic financial risks caused by the disorderly operation of trust companies; the second transformation in 1948 was to help trust companies resolve business difficulties and resolve the crisis of survival; the third in 1952-1953 The transformation is to resolve the risk of illegally carrying out related businesses after the mixed operation of trusts and banks and disrupting the financial order. At the same time, it is also to reverse the dilemma of the transformation of trust banking operations; the fourth transformation started in 1992 is to solve the huge amount of loan trust. The trust bank management crisis triggered by bad debts.

2. The driving force behind the development of Japanese trusts is the needs of economic life

From the four transformations of the Japanese trust industry, we can see that there are successful transformations and failures. The purpose of the transformation is to resolve risks, but the driving force that really promotes the century-old development of Japan Trust comes from the needs of economic life. Introduced corporate bond trust in 1905, Is the Japanese government to raise foreign capital to develop heavy industry and promote economic transformation and development; Loan trust was established in 1952 to meet the long-term funding needs of basic industry development and the use of idle funds of residents; asset liquidity trust after 1992 The rapid development is mainly due to the liquidity of credit assets, the widespread increase in demand for liquidity of corporate assets, especially real estate, and the increasing diversification of individual and institutional investment needs. On the contrary, if there is no market demand, there will be no room for trust to exert value, and there will be problems in the operation of trust institutions. The situation in the early post-World War II period is a typical example.

3. Financial businesses that do not conform to financial laws will eventually be eliminated by the market

Loan trusts have played an extremely important role in the history of Japanese trusts, not only helping the trust banks at the beginning of the transition to reverse In addition to business difficulties, the trust system has become popular in Japanese society. However, the institutional design of the Loan Trust Law itself completely violates financial laws. The high-yield, principal and interest-guaranteed loan trust business is essentially a long-term credit business borrowed in the name of the trust, with typical characteristics of scale conversion, maturity conversion, and risk conversion. . In the end, loan trusts dragged down the trust banks in the bubble economy, and they themselves were completely eliminated by the market. After September 21, 2009, the trust bank no longer sells such products. At the end of 2017, the balance of such trust accounts was cleared and officially withdrew from the stage of history.

4. "Closely follow the core functions of trusts, actively promote in the industry, and advance legal system construction" is the experience of several successful transformations of the Japanese trust industry

The development of the Japanese trust industry has always been based on trusts. Three core functions: asset management, beneficiary rights conversion and bankruptcy isolation. In accordance with the changes of the times, in different historical periods, the field of maximizing the function of trust as the core business has achieved several successful transformations.

The two transformations of the Japanese trust industry after 1948 were all realized under the active promotion of trust banks. In the communication between the author and Sumitomo Mitsui Trust Bank, the other party believes that the relationship between the trust industry and the government in Japan is relatively equal. Many new businesses are initiated and promoted by the trust industry and the trust industry association, while the innovation of the domestic trust industry is more Explore within the scope set by the regulatory authorities.

An obvious common feature of the four transformations of the Japanese trust industry is that the legal system should be established first, that is, legislation first, then business development. Because there are many contradictions and even conflicts between the trust system and the civil law system, in order to use the trust system flexibly, the Japanese government adopts special legislation to solve the obstacles in the trust practice, thus promoting the rapid development of trust business.

Implications for the transformation of China’s trust industry

1. Trust business must enter mainstream economic activities to achieve long-term sustainable development

The fundamental purpose of the five clean-ups and this transformation is to resolve financial risks. The crux of financial risks lies in the fact that the trust business has always been positioned as a "supplement and coordination" role in the financial system arrangement, and cannot enter the mainstream economic activities. Trust institutions have been relying on "spinning the edges and exploiting loopholes" to seek survival and development.

Contrary to the experience of Japanese trust development, the fundamental way out for the transformation of China's trust industry lies in entering mainstream economic activities, meeting the main needs of economic life, and cultivating the main business of maximizing the trust function. Only in this way can a sustainable trust business be formed. The trust function is widely used and the value of the trust system is fully reflected.

2. The prospect of the trust market is extremely broad, and the application of trust in China is still in its infancy

From the perspective of the scale of the Japanese trust market, since the first standardized transformation, the scale of trust assets has continued Growth reached 100 million yen in 1924 and 200 trillion yen in 1992. After the fourth transformation, it ushered in rapid growth. As of the end of 2020, trust assets reached 1,327 trillion yen, a growth in the past 30 years. 6.6 times. Nowadays, the trust system is widely used in Japan for legal persons and individuals for the purpose of asset utilization, asset management, asset inheritance, and public welfare; especially in recent years, the trust business for individuals has covered from youth to middle age, old age and old age. Of various property management services. The Japanese trust industry believes that today, the Japanese trust system has finally reached a state where it has been widely used for different purposes with its own various properties like the United States.

According to the statistics of the China Trust Industry Association, as of the end of 2020, China's trust assets are 20.49 trillion yuan, equivalent to 324 trillion yen in Japanese yen, which is only 24% of the scale of Japanese trusts. At present, China's trust system is mainly used for financing, and it is basically still in the stage after Japan's third transformation; trust assets are relatively single, basically focusing on funds; personal trust business has just started. Overall, China’s trust transportThe application is still at a relatively early stage. In the future, the world generally expects that China’s economy has hope and potential to maintain long-term stable development. Per capita GDP will reach the level of a moderately developed country in 2035. This means that China’s per capita income will increase from US$10,000 to US$20,000 or 30,000. US dollars. Based on this, we judge that the scale of China's trust market will far exceed that of Japan, and the trust market has a very broad prospect.

3. Beneficiary rights conversion and asset management functions are the directions that can be used for reference in the transformation of China’s trust industry

From the perspective of the development history of the Japanese trust industry, the financial function of trust is better than trust The status of inherent asset management functions has long occupied the leading role, and the popularization of trust has been realized through loan trust. However, in fact, the Japanese trust industry has been committed to the use of asset management and beneficiary rights conversion functions since its transformation into a trust bank. Since the 1960s, annuity trust (1962), residential loan debt trust (1973), charitable trust (1977) and other businesses have been successively developed. At this stage, as personal property and corporate property are in the rising period of formation, the market scale of the above-mentioned businesses is extremely small and it is difficult to become the main business of the trust industry. Until the 1990s, with the formation of personal and legal person assets, the rise of direct finance, and the transformation of the social structure of the elderly with fewer children, the scale of asset securitization trusts, annuity trusts, and welfare trusts grew rapidly, and the conversion of beneficial rights and asset management functions gradually The alternative financial function has become the core function of the Japanese trust industry. The realization of this process has been the long-cherished wish of the Japanese trust industry for many years.

Compared with the Japanese trust industry, the current background of the transformation of Chinese trust companies has many similarities with Japan in the 1990s: interest rate marketization, diversified corporate financing channels, continuous increase in the proportion of direct financing, and real estate Bubbles and a substantial increase in demand for asset securitization. Therefore, in keeping with the changes of the times, focusing on the conversion of beneficiary rights and the use of asset management functions should be the future development direction of China's trust industry.

4. It is the general trend for China’s trust companies to transform their business models.

The fourth transformation of the Japanese trust industry clearly tells us that with the changes in corporate financing needs and the transformation of financing forms, The loan trust business, which exerts its long-term financing function and earns loan interest as its main profit model, is difficult to sustain and will eventually die out. Conversely, the demand for asset liquidity is growing rapidly. The Japan Trust Bank seized the opportunity to change its business model and developed liquidized trust products with different asset types to provide various supporting services for enterprises and financial institutions. In the new business model, the trust return rate of trust banks has dropped sharply, but the scale of trust assets continues to rise, and the net profit level of the trust industry remains stable.

At present, as far as China’s trust companies are concerned, the accelerated unified supervision of the asset management industry, the continuous advancement of interest rate marketization, and the unimpeded financing channels will impact their existing business models. The company's non-standard debt business, which uses profit margins as the main source of profit, will also be difficult to sustain. We judge that lower-paid management fee income will be the main profit model of trust companies in the future. The industry will obtain basic management fee income through large-scale operations and obtain excess revenue sharing through longer periods.

5. A complete legal system is a prerequisite for the rapid development of trusts.

As a civil law country, the Japanese trust industry can surpass the UK where the trust originated, which is largely due to its Success in the construction of the legal system. When Japan introduced corporate bond trusts from the United States in 1905, it did not immediately copy the business, but first enacted legislation and enacted the "Guaranteed Corporate Bond Trust Act", which described in detail how this type of business is carried out in the legal provisions. This move set a precedent in the history of trusts all over the world. Since then, Japan's trust business has continued this method of making legislation before developing business, which has solved the practical problem of how to develop trusts in a country without a tradition of equity.

On the other hand, in China, the core reason for the slow development of many trust businesses is the imperfect legal system. In particular, the long-term absence of the trust property registration system has made it impossible to fully realize the protection and isolation functions of trust property. The taxation system is also very unsatisfactory, and there is a phenomenon of double taxation in income tax, value-added tax, and real estate tax involving trusts. Inheritance tax has not yet been levied, and the tax planning function of private trusts is difficult to reflect. These have severely restricted the development of personal trust businesses such as family trusts and charitable trusts.

6. The popularization level of trust and the concentration of the trust industry are important factors that cannot be ignored in the transformation of China’s trust industry.

Loan trust products have realized the popularization of trusts, and more than 7 million households across the country have purchased such products. Without this trust popularization process and the public’s good understanding of trust banks, I believe that in the long runThe Japanese trust industry, which relies on long-term finance, will not be so smooth in the fourth transformation, at least the transformation cycle will not be so short.

For China's trust industry, it is far from reaching the level of trust popularization, and due to several reorganizations in history, the overall image of the industry is not good. Although it has achieved rapid development in recent years and its status in the industry has improved, the positioning of its core business shadow banking has made it difficult for it to get rid of the negative image of being keen on speculation and disrupting macro-control. However, the asset management business and non-standard equity business that the trust company intends to transform not only need a long-term investment performance support, but also a long-term brand establishment. Therefore, the transformation of China's trust industry at this stage will be more difficult than in Japan at that time.

The concentration of the Japanese trust industry has increased after each transformation, especially after the fourth transformation. The trust return rate under the new business model is extremely low. Only by increasing the scale effect can it become bigger and stronger , Improve the overall competitiveness of the industry. For this reason, the Japanese trust industry has carried out 7 mergers and reorganizations since 1999, and finally formed the four pillars of Sumitomo Mitsui Financial Holdings Group, Mitsubishi UFJ Financial Group, Mizuho Financial Holdings Group and Resona Bank. This is one of the key elements for the successful transformation and sustained growth of the Japanese trust industry.

Today's transformation of China's trust industry is facing severe financial competition. There are obvious competitive disadvantages in the asset management business, wealth management business and service trust business directions advocated by the regulatory authorities, and there is no first mover. Advantages, not to mention the advantages of scale. In the future, increasing the concentration of the trust industry and strengthening the integration of mergers and acquisitions within and outside the industry will be the key for China's trust industry to overtake and quickly improve its core competitiveness. It is also the only way for China's trust industry to mature.

7. Transformation must be prepared, seize the opportunity, take the initiative and maintain determination.

Of the four transformations of the Japanese trust industry, the most difficult one is the fourth. At this time, the trust The scale of assets has reached 200 trillion yen, and the loan trust business has been in operation for 40 years, and it is no longer in the state of "small boats and good U-turns". Without years of operating experience in the land trust and real estate industry, it would be difficult for the Japanese trust industry to quickly make a breakthrough in the asset liquidity trust business. At the same time, seize the new business opportunities given by the changes of the times, take the initiative to apply to the government and promote the completion of the relevant system construction, so that the fourth transformation is successful.

In sharp contrast, Japan’s Long-term Credit Bank (Chang Yin), which was also positioned as a long-term financial function in the financial division policy in 1953, has already begun to try to transform into an investment bank. However, without the determination to transform, he was still obsessed with the past model of making quick money. In the late 1980s, he still devoted himself to the real estate business that can obtain the fastest income, trying to use the past business model to survive in the new world. Unfortunately, after the real estate bubble burst, these investments turned into bad debts. In July 1998, Changyin's stock price fell below the par value and declared bankruptcy. Changyin completely lost the opportunity for transformation.

In the face of the same era background and changes in market demand, both Japan Trust Bank and CBBC need to change their original business models and must work hard to survive. However, in fact, because the two made completely different choices, they also had different endings. For the Chinese trust industry, if the transformation is to be successful, it must have the courage and determination to transform. Don't "wait, rely, and demand", seize the opportunity, take the initiative, and make arrangements early.

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