China Huarong sells 70% stake in its consumer finance unit to Bank of Ningbo

[BEIJING] China Huarong Asset Management said on Monday (Dec 27) that it will sell a 70 per cent stake in its consumer finance unit for 1.1 billion yuan (S$234.2 million) to Bank of Ningbo, as Huarong continues to divest assets as part of a business revamp.

After the completion of the deal, Huarong Consumer Finance, the unit, will no longer be a subsidiary of the group, according to a statement filed to Hong Kong Stock Exchange.

Huarong and Bank of Ningbo reached an equity transfer deal on Dec 27, and it is still subject to regulatory approval, it said.

Huarong, 1 of 4 debt collectors created by China's finance ministry in 1999 to process bad loans made by the country's biggest banks, had missed a Mar 31 deadline for filing its 2020 earnings, sparking a rout in its US dollar-denominated bonds that spread to other Chinese issuers.

The bonds then rose in August after it revealed a state-backed rescue plan, under which a consortium led by the state-owned Citic Group agreed to make a strategic investment in it.

The state consortium will help it secure fresh capital worth 42 billion yuan, the company said last month.

Besides the consumer finance unit, Huarong has announced similar plans to sell stakes in a distressed asset exchange unit and the securities unit, amid a regulatory push to sell non-core assets as part of its business restructuring, Reuters has reported.

Last month, Huarong was granted approval to raise 70 billion yuan of financial bonds in the interbank market, as it continues to improve its credit profile and re-focus on its main bad loan business.

REUTERS