China’s rust-belt province of Liaoning merges 12 local banks into one ‘first-class’ bank as bad loans mount
- Liaoning’s economy grew 0.6 per cent last year, lower than the national average of 2.3 per cent and ranking 15th among the country’s 31 provincial jurisdictions
- Coronavirus-induced economic problems have only exacerbated economic woes, particularly in China’s rural areas
The Chinese rust-belt province of Liaoning will merge a dozen local government-owned commercial banks into one large provincial institution, in the wake of an increase in bad loans caused by coronavirus-induced economic problems last year.
The northeastern province reported the plan this week to the Financial Stability and Development Committee, the overarching financial supervisory agency headed by Vice-Premier Liu He, and will bring in strategic investors for the new institution, according to a statement posted on the website of the People’s Bank of China (PBOC) on Thursday.
The merger will establish a “first-class urban commercial bank” that absorbs the 12 existing local banks on “market-oriented” and “law-based” principles, the statement says.
The statement did not provide any bank names.
The strategic shareholders include the state-owned Liaoning Financial Holding Group and PBOC’s deposit insurance fund, which have 20 billion yuan (US$3.09 billion) and 10 billion yuan in registered capital, respectively. The statement added that several large national enterprises would also be involved in the financing and restructuring, but none were identified, and it was not clear whether they would be state-owned or from the private sector.
