China's Bank of Gansu pledges 30 bln yuan loans, report of capital injection (updated)

Bank of Gansu

10/04/2020 10:13

(Releads, adds report of capital injection in the sixth
paragraph)
    BEIJING, April 10 (Reuters) - China's Bank of Gansu
 2139.HK  has agreed to loan 30 billion yuan ($4.26 billion) to
state firms over the next three years, after the Gansu
provincial government reportedly agreed to provide a capital
injection following a spate of withdrawals at one branch last
week.
    The Hong Kong-listed bank, which is controlled by the
provincial government, pledge the loans in an agreement signed
on Thursday with the Gansu branch of the State-owned Assets
Supervision and Administration Commission and nine companies
owned by the provincial government, the Guansu Economic Daily, a
newspaper also run by the provincial government, reported on
Friday. 
    The collaboration between the bank and the state-owned firms
will "effectively support steady and healthy economic and social
development in the province," according to a statement on the
provincial government website.
    Bank of Gansu didn't immediately respond to a Reuters
request for comment. 
    The bank, which had total assets of 335 billion yuan as of
end of last year, counts the state-owned Gansu Provincial
Highway Aviation Tourism Investment Group as its biggest
shareholder. 
    The Gansu government approved a plan on Tuesday to inject
capital into the bank with support from the central bank's
special loans, financial news outlet Caixin reported on Friday,
citing unidentified regulatory sources. Caixin didn't specify
the size of the capital injection.
    People's Bank of China officials declined to respond to
questions about Bank of Gansu at an unrelated news conference on
Friday. 
    The move comes as investors and depositors grew anxious 
about the bank's performance after its 2019 net profits slumped 
85% year-on-year. The bad-loan ratio picked up by 16 basic
points to 2.45% last year from the end of 2018. 
    Since the start of April, the bank's shares have plunged
nearly 30% in Hong Kong trading.
    A branch of the bank in Hui, a county in Gansu with a
population of more than 220,000 people, received a high volume
of over-the-counter requests from depositors to withdraw cash on
Sunday. 
    The local government and regulators later issued a joint
statement on Monday saying Bank of Gansu had sufficient assets,
and its operations and management were in good standing.
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    Local governments have been playing an active role over the
last year to rescue several troubled banks as Beijing looks to
shore up some of the country’s weakest lenders amid slowing 
economic growth. 
    The governments of Inner Mongolia Autonomous Region and
Baotou, a major city in the region, will lead the acquisition of
at least a 50% stake in a reorganized Baoshang Bank, Reuters
reported in January.
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($1 = 0.1415 Chinese yuan renminbi)

 (Reporting by Zhang Yan, Cheng Leng, and Ryan Woo in Beijing;
Editing by Kim Coghill, Shri Navaratnam & Simon Cameron-Moore)
 ((Zoey.Zhang@thomsonreuters.com;))