China’s Harbin Bank shares rise after state takes control in deal worth $2b

Commercial buildings including the China Central Television (CCTV) Headquarters, center, stand in the central business district of Beijing. Photographer: Tomohiro Ohsumi/Bloomberg

Shares of Harbin Bank, a midsize lender with links to the troubled conglomerate Tomorrow Holdings, rose more than 9% on Monday as state-backed investors became its key shareholders in a $2 billion deal.

The bank will now be 48%-controlled by two state-controlled entities – Harbin Economic Development & Investment Co and Heilongjiang Financial Holdings Group Co – while six private shareholders have dropped their stakes, the lender said in a filing to Hong Kong stock exchange late on Friday.

The total transaction will be worth around 15 billion yuan ($2 billion), or 4.8 yuan per share, the bank said, or more than three times the shares’ Hong Kong close on Friday.

The change in shareholding marks the latest move by Beijing to soothe investor concerns about troubled small lenders amid a slowing economy and a crushing trade war with the United States.

Earlier this year, Chinese regulators took control of Inner Mongolia’s Baoshang Bank, in which Tomorrow Holdings had an 89% stake, citing “serious” credit risks and improper and significant illegal use of bank funds.

Harbin Bank, also partly owned by Tomorrow, was operating smoothly at the time, the China Banking and Insurance Regulatory Commission (CBIRC) had said.

The lender, based in China’s northern Heilongjiang province, did not disclose the reason for the change in shareholding in its latest filing with the exchange.

The central bank and the CBIRC did not immediately respond to Reuters’ request for comment.

The CBIRC has previously said that Tomorrow has been voluntarily transferring stakes in more that 10 financial institutions including Bank of Langfang and Taian Bank to new investors, and risks associated with the group had been contained.

The group has been divesting some assets since its chairman Xiao Jianhua was investigated more than two years ago amid a state crackdown on systemic risks posed by financial conglomerates. The billionaire has not been seen since 2017.

Shares of the Hong Kong-listed lender, which hit a high of HK$1.65, was up 6.62% at HK$1.61 as of 0338 GMT.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.