China Injects 2 Trillion Won to Rescue Troubled Jinzhou Bank

[Asia Economy Beijing=Special Correspondent Park Sun-mi] On the 11th (local time), the Wall Street Journal (WSJ) reported that Chinese state-owned investment institutions will inject 12.1 billion yuan (approximately 2.079 trillion KRW) to rescue the troubled Jinzhou Bank.

Jinzhou Bank recently announced on the Hong Kong Stock Exchange that it plans to raise 12.1 billion yuan through a new share issuance. The buyers of the new shares are Qingfang Huyida, a subsidiary of Xinda Asset Management, one of China's representative 'bad banks,' and Liaoning Financial Holdings, an investment institution under the Liaoning provincial government.

Qingfang Huyida will become the largest shareholder by acquiring a 37.7% stake in Jinzhou Bank, while Liaoning Financial Holdings will hold 6.7%. Jinzhou Bank stated that the funds raised through the new share issuance will be used to increase its core capital ratio and restore financial soundness.

Jinzhou Bank is a representative troubled bank that has faced bankruptcy risks since last year due to insolvency. The bank recorded a net loss of 4.59 billion yuan in 2018 alone. The amount of non-performing loans held by the bank has increased eightfold compared to a year ago.

The decision by Chinese state-owned investment institutions to inject funds into the normalization of troubled banks was made amid concerns that the outbreak of COVID-19 would lead to a surge in insolvent companies within China. This measure is interpreted as an effort to prevent the expansion of risks throughout the financial sector caused by bank failures and to avoid losses being borne by depositors and creditors.

China also took emergency measures last May to support and restructure Baoshang Bank in the Inner Mongolia Autonomous Region, which was facing bankruptcy, and nationalized it.

This content was produced with the assistance of AI translation services.