Chinese city seeks greater state firm investment in Evergrande-backed Shengjing Bank

Shengjing Bank Co

23/07/2021 06:56

BEIJING, July 23 (Reuters) - China's northern city of
Shenyang has encouraged local state-owned companies to increase
stakes in Shengjing Bank  2066.HK , which Evergrande Group
 3333.HK  has a 36% stake in, according to statement by the bank
on Thursday.
    The remarks were made by Gao Wei, deputy mayor of Shenyang,
the capital of Liaoning province, in a meeting with bank
executives and local financial and state asset regulators, on
Thursday, according to the statement.
    Gao said the city government values the reforms in Shengjing
bank and will strengthen the Communist Party leadership in the
bank to help it develop into "a good bank," according to the
statement.
    He did not elaborate on when and by how much the stake
purchase will be arranged.
    Controlled by China's most indebted developer Evergrande,
the financial health of Shengjing has been put under spotlight
since May, after financial news outlet Caixin reported that
country's top banking watchdog was probing connected
transactions worth over 100 billion yuan ($15.45 billion)
between Evergrande and the bank.
    In a statement on July 5, Evergrande said its financial
business with Shengjing complies with legal requirements.
    Shengjing reported a net profit of 1.2 billion yuan in 2020,
down 78% from a year earlier.
    The bank's non-performing loan ratio stood at 3.26% by the
end of 2020, higher than the industry-wide average of nearly 2%.
    Despite repeated statements on its sound financing ability,
investors continued to dump shares and bonds of Evergrande amid
a government crackdown on developers' funding sources.
    On Friday, Evergrande shares were on track for their biggest
weekly drop since plunging more than 26% in late September
2011. urn:newsml:reuters.com:*:nL1N2OZ05U
    Some banks in Hong Kong, including HSBC  HSBA.L  and
Standard Chartered  STAN.L , also decided to decline loans to
buyers of Evergrande's incomplete residential projects, Reuters
reported.  urn:newsml:reuters.com:*:nL1N2OX0P7

($1 = 6.4716 Chinese yuan)

 (Reporting by Cheng Leng and Ryan Woo; Editing by Sam Holmes)
 ((cheng.leng@thomsonreuters.com; +8610-5669-2129;))