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), , to clean up their finances. More deals could be in the works. (By Anshuman Daga)
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