International Comparison of Historical Evolution of Trust Industry

Executive summary:

The development of the trust industry in the developed countries of the world has both commonalities and characteristics. These properties have grown up in the long history of the trust industry. The processes in the United Kingdom, the United States, and Japan are the most representative. The analysis and comparison of the historical evolution process of the trust industry in these countries is conducive to understanding the impact of different times and actual conditions on the system, characteristics and development direction of the trust industry, and is also conducive to a correct understanding of the phenomena appearing in the development of China's trust industry. problem.

Keywords: trust, historical evolution, comparison, system

The International Comparison of Trust's Evolution

Key word: trust evolution comparison system

I. Introduction

China's trust industry has been somewhat weird since its inception. A large number of trust companies have the name of a trust but no trust. They operate a business similar to a bank under the banner of a trust company, and they have a large amount of financial risks. However, it is unfair to accuse the trust company of its behavior. The financial risks of the trust company are mostly the result of obeying the local government directives. The “out of position” of the trust company’s business is rather the result of market selection. To explain the irregular behavior of trust companies in China at that time, we must also look for ways to cultivate the trust company's soil. Many problems in the development of China's trust industry have also appeared in the history of the development of the Japanese trust industry. Comparing the institutional base points of the two countries will find many similarities. Comparing how the Japanese trust industry passed the chaotic stage at that time and established its own development direction will help to analyze the current situation of China's trust industry. On the other hand, the world trust industry originated from the maturity of the United Kingdom in the United States. Only by understanding the institutional basis and development direction of the evolution of the Anglo-American trust industry can we recognize the true face of the trust industry. In this paper, we first start from the institutional basis of the evolution of the Anglo-American trust industry, and examine the historical evolution of the world trust industry in terms of time and country, and hope to learn from the development of China's trust industry.

Second, the institutional basis of the evolution of the trust industry

The trust systems of countries are established at different stages of economic and social development, with different characteristics of the times.

The establishment of the trust system in the United Kingdom and the United States is a typical institutional demand that leads to the supply of institutions. The trust originally originated from the special event of disguised British believers in the church land, and was subsequently followed by emulation and spread to general inheritance and other property management. The earliest trusts in the UK were personally undertaken, mainly dealing with public interest and private property matters. The number of people adopting this rule has gradually increased, so that a certain number of critical points have been reached, and the trust has become an internal system of society. The trust's business volume and business scope are growing, and the complexity and instability of the trust's internal relationship coordination are becoming more and more obvious. The government feels the need to coordinate the internal relationship of the trust with standardized laws. With the formulation and implementation of relevant laws, a trust as an external system3 was created. The British Government enacted the Trustee Act in 1893 and began to manage the trust industry undertaken by individuals as trustees.

The beginning of the US trust industry is more market-oriented. There are very few public institutions such as the British-style government-run trust bureau, which are basically private trust institutions. On the one hand, the United States has inherited a non-business trust based on trust and based on the principle of non-compensation. On the other hand, it has creatively used trust as a business and operated in a large scale in the form of corporate organization. The United States first completed the transition of personal entrustment to legal persons and the transfer of civil trusts to financial trusts, laying the foundation for the modern trust system. In 1853, the first specialized trust company, the US Federal Trust Company, was established in New York, which has a milestone in the development of the trust industry. The development of the Anglo-American trust system is a gradual feedback and adjustment route, and the development of the trust system and the trust industry are relatively stable.

The situation in Japan is different from that in the United Kingdom and the United States. In Japan, the institutional supply of trusts is not based on the full development of institutional needs, but is built on a sudden supply of institutions. Japan first established a trust system, which originated from the wave of comprehensive study of the West after the Meiji Restoration, and then quickly turned into a tool for fund raising in order to solve the problem of lack of funds in the process of industrialization. However, without the basis of institutional demand, the supply of the system is inevitably thin. With the rapid development of the trust industry, a series of deep problems continue to grow: the trust activities are extremely irregular, the characteristics of the trust business are not obvious, and more engaged in intermediary, credit, Non-trust businesses such as insurance; trust companies have insufficient capital and low credit, which is likely to cause damage to the public interest and lead to chaos in the economic order.

The beginning of China's trust industry is similar to that of Japan. In the 1980s, China's trust companies were too much, but there was very little trust business in the true sense. It became a hotbed of risk, and the main reason was the lack of institutional demand. There are two basic conditions for the establishment of the trust system: one is the dispersion of social property, and the accumulation of social wealth is high; the second is that property owners have a strong demand for the preservation and appreciation of their property. In the 1980s, China still did not have these two conditions. Even at the end of 2002, the statistics of the People’s Bank of China showed that the savings deposits of residents reached 8.7 trillion yuan, but the diversion direction was mainly concentrated in housing, consumption, national debt, stock market and so on. There is basically no demand for trusts. In the case of insufficient development of institutional demand, on the one hand, the main business of the trust company is unknown, and other financial businesses as an alternative have grown very quickly. There is no essential difference between the so-called trust deposit and loan, trust investment and banking business of the trust company; the proxy securities issuance business of the trust company conflicts with the main business of the brokerage business; the financial leasing business engaged by the trust company coincides with the business of the leasing industry. There is basically no business in the trust company that truly reflects the nature of the trust. On the other hand, the investment tendency and mode of the trust company reflect the interests and will of the local government, the competent department of the enterprise or the enterprise. Many local government-run trust companies have become subsidiaries of local governments, facilitating the self-raised basic construction and fixedness of local governments. The asset project strengthens the local government's administrative intervention in fixed asset investment and loans, and profits and business performance are placed in a secondary position. Once these mechanisms, which used to sell government reputation as collateral to gain trust from domestic and foreign customers, were broken, and the government was not acting as the last lender, the trust crisis in the trust industry was inevitable.

Third, the comparison of the evolution direction of the trust industry

Different institutional basis points have led the countries' trust industry to enter different institutional transition paths. Among them, the path of change in the United Kingdom is relatively conservative, the path of change in the United States is relatively open, and the path of change in Japan has experienced severe shocks. In the context of their respective path dependence, the trust industry in various countries has gradually identified different models as the development direction.

Since its establishment, the UK trust industry has moved towards a personal trust-based model, mainly including civil trusts and charitable trusts. The civil trust mainly undertakes the will trust; the charitable trust refers to the payment of the donated or raised funds to the trustee, and the designated trustee uses the entrusted funds or property to set up public welfare undertakings such as schools and hospitals. From the subject matter of personal trusts, land trusts are mostly used. This feature is inseparable from British historical traditions and customs. The British are generally more gentlemen and conservative, and are reluctant to put property into higher-risk securities trusts and money trusts; the UK's securities market and capital markets are not as active as Japan and the United States, and there is no atmosphere of securities trusts and money trusts; It is a veteran capitalist country with many colonies and property is often expressed as real estate.

In the United States, after the end of the Civil War, the construction boom began, and companies that built railways and mines were established. Most of the huge funds needed were raised through the issuance of stocks and corporate bonds. At the same time, with the development of industrial capital, a large number of wealthy people have emerged in the society, and the issuance of stocks and corporate bonds has also increased. Objectively, there are more agencies. As a result, securities have gradually replaced the original land-based trust objects, and the US trust industry has gradually established a model based on securities trusts. The prosperity of American Securities Trust is due to the economic environment and customs of the United States: the United States has a higher shareholding system, and the proportion of property converted into securities is large. The developed capital market and mature legal system in the United States also provide a basis for US securities trusts. And space. In the United States, almost all kinds of trust institutions handle securities trust business, which serves both the issuer of securities and the purchaser or holder of securities, especially through the function of shareholders of voting rights, and the position of directors in the board of directors. Thereby participating in controlling the enterprise.

The Anglo-American trust industry has grown on the basis of the full development of the internal system, so it is natural to find its own development direction. Japan's trust industry system needs innate development, so it is inevitable to experience some twists and turns on the road of development. Numerous small trust institutions carry out a large number of non-trust businesses, which are in line with the company's profit requirements. However, from a macro perspective, it is not conducive to the overall financial order, and there is an urgent need to change the external system to coordinate. In particular, after 1920, the economic recession in Europe and the United States spread to Japan, exposing the various ills formed during the initial development of the Japanese trust industry, and the collapse of trust companies. Japan used the weapon of separate business 6 and made demands on the scale of trust institutions. It eliminated a large number of small companies with insufficient funds, and the trust industry quickly got rid of the predicament of lack of main business and chaotic competition. The trust company after rectification has strong capital and good reputation. However, the actual process of the Japanese trust industry has not developed in full accordance with the expected model: at the beginning of the establishment of the policy of separate operations, people hope that the Japanese trust industry can return to the "industry", that is, return to the Anglo-American model, but in practice The money trust, a business variety with Japanese characteristics, was created, and the business volume increased rapidly. The trust company began to perform long-term financial functions. Japan is mainly based on money trusts and is related to Japan's national conditions. The property of Japanese residents is mainly in the form of money. The securities and other assets are less and the habit of not being managed by others in the form of other property. The trust institution can only operate in the form of monetary money trust; the income of money trust is better than that of commercial banks. Interest is high and attractive to the client; and this kind of money trust, which exists in a long-term form, is applied to the country's basic industry projects through loan trusts, adapting to the needs of the development of the Japanese national economy.

The starting point of China's trust industry is similar to that of Japan. The problems encountered in the development process are similar to those in Japan, and the means of solving problems are similar to those in Japan. In 2001, with the promulgation and implementation of the "Trust Law", "Administrative Measures for Trust and Investment Companies" and "Interim Measures for the Management of Trust and Investment Corporations' Fund Trust Business", the Chinese trust industry began to enter the norm of standard operation. According to the relevant regulations of the People's Bank of China, one or two trust companies are reserved in each province and autonomous region. As of March 2003, 239 trust companies nationwide should completely withdraw from the trust market, and there are about 160 companies that have been removed from the trust. The number of companies that have been announced for delisting has reached 118; the remaining 80 will be retained as 60. Around the home, 44 of the 80 companies have been re-examined and registered, and the combined retention is 42. Separate operations, mergers and acquisitions can better monitor the investment of trust companies, control financial risks, and protect the interests of principals. It is an effective means to rectify financial order and regulate trust behavior, but where is the next step in the trust industry? Do not rely on people's subjective will. China's current wealthy individual is often a successful business operator. It is a strong financial manager. The trustee trust company has a weak desire to manage money. At the same time, the rapid growth of China's economy makes these individuals with large wealth themselves in the funds. The status of the demander, there is no long-term idle funds for the trust company to manage, China still lacks the basis of civil trust; although the trust company can engage in the issuance of securities, it can also organize funds into the securities market, but compared with the general securities companies and The fund does not have any special advantages. It is more difficult to take the Anglo-American model in the short term. At the beginning of the rise of the Japanese trust industry, the banking industry has just developed. Therefore, the trust industry may have the long-term financial cake from the banking industry, but China The foundation of the banking industry is much stronger than that of the trust industry. Even in the long-term financial aspect, the trust industry is difficult to occupy a dominant position, so it is impossible to copy the old road of Japan. Where is the breakthrough of China's trust industry? It is indeed a question that is more difficult to answer. From the reality, after the comprehensive rectification, the highlights of the trust industry are mainly concentrated on public projects. This is related to the special historical period in which our country is located. China is in a special period of transformation of government functions, and the ownership and management rights of public projects are gradually decoupling. Banks can finance public projects but are difficult to intervene in the specific management of public projects. At the same time, fundraising and management are the advantages of trust companies. And these projects generally have government credit as a guarantee, which makes it easier to obtain the trust of the client. At present, most of the collective fund trusts with strong development momentum in China are concentrated in public projects, such as the overseas ring tunnel project, the Changchun ecological environmental protection project, the Changchun infrastructure project, the Binhai New Area pipe network facility, and the construction of Shaoxing Culture Street.

4. Comparison of the evolution characteristics of modern trust industry

After establishing their respective development characteristics, the world trust industry is developing in a more mature direction. At this stage, the development of personality between the trust industries in various countries has gradually ceased, and instead of the development of commonality, the trust industry in the world has experienced a similar evolution trend. Although China's trust industry is still in the preliminary stage of the development direction, it is in the environment of the world trust industry, so it is impossible to leave the mark of such a general trend.

1. The common trend is manifested in the trust industry as the concentration of trust property. The UK trust industry is concentrated in the trusts and trust companies established by the four major banks, including National Westminster Bank, Barclays Bank, Midland Bank and Lloyd Bank. These four companies account for all corporate trust assets in the UK. 90%. The US trust industry has basically been monopolized by the trust departments established by domestic commercial banks, especially large commercial banks, and there are few professional trust companies. At present, the trust property managed by the top 100 banks in the United States accounts for about 80% of the entire US trust property, and is in an undisputed monopoly position. After 1950, due to the government's strict trust industry approval, Japan's trust industry has been concentrated in the hands of the main seven trust banks. In recent years, as Japan’s economy and financial sector continue to slump, Japan’s trust industry has continued to merge and reorganize, and there is a trend of further concentration, such as the merger of Tokyo’s Mitsubishi Bank and Mitsubishi Trust Bank. The total assets after the merger amounted to 8.7 trillion yen, making it the fifth in the world. The big bank, on January 1, 2000, TD Bank completed the acquisition of the CT consortium and established the TD Finance Group.

Since most of the trust companies in China have been founded and operated by the state, many local government-run trust companies have even evolved into appendages of local governments, mainly serving the local government's self-raised capital construction and fixed asset investment, so trust investment. The company assumed part of the government's functions from the beginning. The effect of the strengthening of government functions is the division of the business development space of trust institutions, which is extremely regional, and there is basically no cooperation between the trust institutions, and there is also less competition. Through the clean-up and rectification, the number of trust companies in China has decreased from more than 1,000 in 1998 to 60, and the number has been greatly reduced. However, the number of trust companies in China has been significantly higher than that in developed countries, and the concentration of the industry is relatively low. At present, most trust institutions have made major adjustments to the equity structure, enterprise model, internal control mechanism, and management system in accordance with modern enterprise management requirements and marketization standards, basically eliminating the phenomenon of serious administrative intervention and operating according to administrative orders. Marketization configuration. The merger and reorganization of the trust industry is being transformed from the government to the market-oriented. The all-round competition in the administrative region is beginning to take shape. Xinjiang Jinxin Trust, Xinjiang SDIC, Xiamen United Trust, and Qinghai Qingtai are stationed in Shanghai. One of the competitive signals.

2. The common trend is manifested in the outside of the trust industry as the homogenization of trust institutions and other financial institutions. Nowadays, the business of foreign trusts and other financial institutions crosses, and the institutions are intertwined and closely integrated, which makes the concept of the independent financial institution of the trust become blurred. Whether in the United States or in Japan, banks are also engaged in trust business and trust institutions in banking business, and some have trusts within banks, and some are trust banks. Although within the bank or within the trust institution, the two departments of the bank and the trust are clearly separated, the two are different in nature and business focus, and the internal settlement is self-contained, but the boundaries have become increasingly blurred and provided by the trust. There is no significant difference between the financial products and financial services provided by the banks. In the United States, almost every bank has branches that specialize in trust business, providing people with a wide variety of trusts. In addition, the combination of trust and securities is unprecedented, and the two companies are both competitive and cooperative in the securities business. In Japan, the tendency of trust institutions to share securities business is obvious, and the securities investment business is expanding. To a certain extent, it adapts to the trend of national savings forms gradually shifting from deposits and trusts to securities. Many countries have almost no legal restrictions on the operation of securities business in trust institutions.

Financial mixed operation is the trend of the times, but in China, due to the imperfect laws and regulations, financial supervision is still lacking, the risk awareness of financial institutions itself is not high, and the internal restraint mechanism has not been established. Therefore, the financial industry is divided into separate operations and separate supervision. The principle is necessary. However, the division of operations does not hinder business cooperation. This cooperation is first reflected in the mutual cooperation of retail business: from the perspective of the efficiency of the entire financial system, trust and investment companies use the retail channels of other financial institutions to promote products. At present, other financial institutions will improve the operational efficiency of the entire financial system in the case of a single retail business and a small business volume. Secondly, the trust business of the trust and investment company, especially the fund business, needs strong support from the custodian banks and the referral agencies. This constitutes a deep cooperation between the trust and the bank, and increases the intermediary business of the bank while the trust company conducts business. And then form complementary advantages and achieve a win-win situation. Thirdly, trust investment companies investing in the securities market must pass through the brokerage business channels of securities companies. At the same time, trust investment companies are also large institutional investors in the securities market and an important part of the securities market. In addition, in the field of investment banking, the diversified means of trust companies and the exclusive qualifications of securities companies will inevitably form a multiplier effect of strong alliances.

V. Conclusion

Based on the review and analysis of the development history of the trust industry in the three stages of the United Kingdom, the United States and Japan, combined with the thinking of the growth of the trust industry since the reform and opening up of the trust industry in China, we can draw the following conclusion:

1. Institutional demand is the fundamental reason for promoting the emergence and development of the trust industry. When the system demand is insufficient, the system supply will be pushed out, which will cause the trust industry to deviate from the original direction. At this time, it is necessary to correct the original system supply according to the actual situation. .

2. The development direction of the trust industry is determined through market mechanisms in market competition. The traditions, customs and habits of various countries are the deep-seated reasons for determining the development direction of the trust industry.

3. The global financial mixed operation and mergers and acquisitions have become a trend, and the trust industry in China has also shown signs of this.

According to comparative analysis, China's trust industry should pay attention to the following aspects in the next development: