China’s Shengjing Bank in 176 billion yuan deal to sell assets to government-backed entity

CHINESE regional lender Shengjing Bank said on Wednesday (Sep 27) it has agreed to sell a portfolio of assets, including certain loans and investments, among others, for 176 billion yuan (S$33 billion) to Liaoning Asset Management.

Liaoning Asset will fund the purchase of assets by issuing special-purpose notes to the bank, the lender said.

The bank, based in the northeastern Chinese city of Shenyang, expects an unaudited provision for impairment of about 7.7 billion yuan, it said, adding that the deal will improve its asset quality and lower non-performing loan ratio.

Over 70 per cent of the assets to be disposed are loans and the remainder include asset management plans, corporate bonds and deposits with banks, Shengjing Bank said.

Liaoning Asset, which focuses on transactions of non-performing assets of financial institutions, is a unit of Liaoning Financial Holding owned by the finance authority in the Chinese province of Liaoning, where Shengjing Bank is based.

Last month, Shengjing Bank reported a 21.8 per cent drop in its net profit attributable for half-year to 737.9 million yuan. Its net interest income for six months slipped 1.3 per cent to 15.32 billion yuan.

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The non-performing loan ratio was 3.17 per cent as at end of June.

The bank’s net interest margin – a key gauge of profitability – stood at 1.22 per cent in the Jan-June period, versus 1.30 per cent a year ago, according to its half-yearly report. REUTERS