Caixin
Apr 20, 2020 07:50 PM
FINANCE

Financial Giant Anbang to Sell Rural Bank Back to Local Government

China’s top insurance regulator sold many of Anbang’s assets after taking over the debt-ridden conglomerate in February 2018.
China’s top insurance regulator sold many of Anbang’s assets after taking over the debt-ridden conglomerate in February 2018.

Once-highflying financial empire Anbang Insurance Group Co. Ltd. is set to sell the remainder of its 55.5% stake in a rural bank to a local government, spinning off one of the group’s largest assets, previously used to facilitate high-profile investments at home and abroad.

Two local state-owned enterprises (SOEs) in Chengdu, the capital city of Southwest China’s Sichuan province, will purchase a combined 20.5% stake in Chengdu Rural Commercial Bank Co. Ltd., the lender said in a Friday statement (link in Chinese).

The stake will be transferred from 10 shareholders actually controlled by Anbang, sources with knowledge of the matter told Caixin. Last month, Anbang sold a 35% stake (link in Chinese) in the bank to another Chengdu SOE.

The announcement of the upcoming deal, which comes nearly two months after the Chinese government ended its two-year takeover of Anbang, marks the latest asset shed by the scandal-ridden titan under regulator instructions.

China’s top insurance regulator sold many of Anbang’s assets after taking over the debt-ridden conglomerate in February 2018. In May 2018, Anbang founder Wu Xiaohui was sentenced to 18 years behind bars for fundraising fraud and embezzlement.

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Anbang is among a group of high-profile Chinese giants that accumulated billions of dollars in assets both at home and abroad in recent years. Many of them have been forced to sell off assets, as Beijing warned of financial risks posed by their massive piles of debt in mid-2017.

Anbang started out as a minor car insurer in 2004, and began making global headlines in 2014 with an ostentatious overseas shopping spree, pocketing pricey assets including New York’s iconic Waldorf Astoria Hotel. Behind the scenes, Wu was leveraging his ties to a key political figure — his most recent wife is a granddaughter of late state leader Deng Xiaoping — and portraying himself to outsiders as highly connected in order to achieve his ambitions.

The 2011 takeover of the Chengdu rural bank pushed Anbang’s assets well over 1 trillion yuan ($141.5 billion) in 2014, allowing it to conduct more investments under Chinese regulations.

Once the two Chengdu SOEs complete their purchase of Anbang’s remaining 20.5% stake in the rural bank, the Chengdu government will regain control of the lender.

The Chengdu government owned a 31% stake in the bank when it was established in December 2009. In November 2011, Anbang overtook the city government as the lender’s biggest shareholder by purchasing a 35% stake through a private placement, and later bought another 20.5% stake through related companies.

As of the end of September, the bank had about 550 billion yuan in total assets and 506.7 billion yuan in total liabilities, according to audited financial statements.

Contact reporter Lin Jinbing (jinbinglin@caixin.com) and editor Gavin Cross (gavincross@caixin.com)

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