China small-bank take private offers big relief
29/01/2024 05:24
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
SINGAPORE, Jan 29 (Reuters Breakingviews) - Delisting
might be the easy way out for China to keep its troubled, small
lenders out of the public eye. Bank of Jinzhou 0416.HK , which
was rescued by a $1.7 billion bailout from the central bank and
local authorities in 2020, has received a rare takeover offer
from an entity owned by the Chinese province of Liaoning for
just over $1 billion.
The provincial government, which oversees China’s
northeastern rust belt, is offering to buy all the Hong Kong and
mainland shares it does not already own. The deal represents a
discount of 72% to the troubled lender’s book value per share as
of June 2022. Its Hong Kong stock has been suspended for a year
since the bank failed to publish 2022 results.
Bank of Jinzhou went public in 2015, only to lurch from
crisis after crisis including ties to the controversial Hanergy
Thin Film Power Group and its exposure to local government
financing vehicles. S&P Global Ratings estimates that regional
banks could face a combined $306 billion hit in capital losses
over the next few years due to debt restructuring at LGFVs.
Going private might make it easier for Bank of Jinzhou and
property-exposed peers, including Bank of Guizhou 6199.HK and
Bank of Zhengzhou 002936.SZ 6196.HK , to clean up their
finances. More deals could be in the works. (By Anshuman Daga)
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(Editing by Robyn Mak and Katrina Hamlin)