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BEIJING, Oct.28 (Reuters) – Chinese firm Zhongyuan Bank Co (1216.HK), an urban lender in central Henan province, has announced plans to merge with three other local banks amid Beijing calls for consolidation small banks to contain risks in the regional banking system.
Zhongyuan Bank, established in 2014 with the merger of 13 small banks in Henan, to acquire Bank of Luoyang, Bank of Pingdingshan and Bank of Jiaozuo China Travel Services Co, according to the company’s filing with the Hong Kong Stock Exchange on Wednesday. .
Bank of Luoyang was listed as one of the top 20 banks of struggling real estate giant China Evergrande Group (3333.HK), according to the developer’s interim report released in September.
Bank of Luoyang did not specify its exposure to loans to Evergrande. At the end of 2020, 9.15% of its outstanding loans were loaned to the real estate sector, according to its annual report.
After the potential merger is finalized, Zhongyuan Bank will continue to expand its business and “improve the capacity of financial services for the economic and social development of the province,” he said.
Zhongyuan did not say how he would settle the assets and liabilities of the three small banks, and warned that the deal had not yet been finalized.
In September, northeast China’s Liaoning Province established the Bank of Liaoshen, a new provincial-level commercial bank formed by the merger of local banks, amid a deteriorating economy in the Rustbelt province.
Henan’s local economy was disrupted by the COVID-19 pandemic, and heavy flooding in July killed more than 300 people, increasing pressure on the local banking system.
Zhongyuan Bank and Bank of Luoyang did not immediately respond to questions sent by Reuters.
Reporting by Cheng Leng, Zhang Yan and Ryan Woo; Editing by Lincoln Feast.
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