Another State-Owned Firm Joins Bank of Gansu Bailout
What’s new: Troubled regional lender Bank of Gansu Co. Ltd. plans to issue 1.25 billion new Hong Kong dollar-denominated H-shares to a state-owned enterprise in its home province of Gansu, sources with knowledge of the matter told Caixin, as more state-owned firms join its recapitalization.
This is part of a state-backed bailout to support the Hong Kong-listed lender and reduce financial risks amid slowing economic growth. “(The bailout) is generally going well at present, and we hope to complete it as soon as possible,” a source close to the bank told Caixin.
What’s the background: In July, the embattled bank won approval to issue new shares, including yuan-denominated and Hong Kong dollar-denominated shares, to shore up its weak balance sheet.
Four other companies controlled by the Gansu provincial government will subscribe for all the 3.75 billion yuan-denominated shares, the bank previously revealed.
In the first half of this year, Bank of Gansu had revenue of 3.2 billion yuan ($469.3 million), down 15.9% year-on-year, mainly due to a decline in net interest income. Its net profit fell 28.9% to 368.5 million yuan, according to its latest earnings report.
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