Bohai Bank to sell US$3.5 billion in loans to China’s bad banks in bid to shore up capital
- The sale emerges as China’s banks struggle with rising bad debt after a real estate market slump and as the economy struggled to regain momentum
China Bohai Bank proposed to sell US$3.5 billion worth of assets at a discount to bidders including the nation’s bad debt managers via a public tender to shore up capital levels.
The assets, with a principal amount of 25.6 billion yuan (US$3.5 billion), will be be disposed to potential bidders, including China’s big four bad banks led by China Cinda Asset Management, according to an exchange filing on Monday.
The amount the Tianjin-based lender is seeking to sell is 54 per cent more than the 16.6 billion yuan non-performing loans that it reported having at the end of last year. Bohai also had 28.9 billion yuan in special mention loans at the end of last year. This is debt where payment is seen at risk but that has not become non-performing yet.
China’s banks have been struggling with rising bad debt after a real estate market slump and as the economy struggles to regain momentum. Margins have also narrowed to record lows after lenders were called on by Beijing to help businesses and consumers with cheap loans.
The assets for sale incurred a loss before tax of 1.58 billion yuan in 2023, the filing said, compared with the lender’s profit of 5.08 billion yuan.
